Are you getting the right financial advice?

Published on behalf of Brian Furzer of Spectrum IFA;

In recent months I have come across a number of instances of so called ‘predatory’ firms offering financial advice, with particular emphasis on pensions - offering to unlock cash for clients from a Qualifying Recognised Overseas Pension Scheme (QROPS). This advice has, in all cases, been inappropriate and offered without any proper procedure other than establishing pension values. Regrettably some clients have proceeded with the transfers but, fortunately, others came to me and I was able to offer advice which encouraged a change of direction for the benefit of their current or future circumstances and finances.

These are the main reasons why I have been alarmed:

  1. The clients have received either wholly or partially inappropriate advice to transfer their funds.

  2. The firms concerned have no regulation in France and, therefore, they are not accountable for any loss on the part of the client either now or in the future.

  3. The high level of fees that these firms are charging over and above the commission which they will be receiving from the investment provider.

It seems that the advice trail begins with the client contacting the firm on the basis that they believe that they will receive professional and appropriate advice. The pension details are then established and without exception (in the cases I have come across) they are advised to transfer the pensions to a QROPS. This has happened on every occasion I have discovered, despite the fact that in a number of instances final salary schemes were involved. It is usually wholly inappropriate to transfer from such schemes due to guarantees that are in place. However, all individual circumstances vary and indeed so do final salary schemes.

A final salary scheme is a pension that is part of a previous employment and carries with it guarantees which need to be carefully examined and compared against the alternatives. In two cases where I was consulted the final salary schemes were public sector and under practically no circumstances would I recommend a transfer out of this due to the solid guarantees in place. The advice was given by the original advisers to transfer and, fortunately, the clients all had rethinks and left their pensions where they were.

In addition to this, the firms are asking for 5% (of the pension fund) as an upfront fee plus an annual percentage fee for “managing” the pension. The business is placed with a reputable investment house that pays commission to the advisers in addition to this, but there is the strong chance that constituent funds are used which also pay additional commission! There is a great reduction in the overall pension pot for the client due to this systematic charge after charge and the effect is debilitating to the end result for the client.

Unfortunately, these firms are high profile in terms of advertising and if anyone has made a Google search then the next time that they visit any general site there will be a banner suggesting you click for “independent advice on releasing your pension”. Anyone with interest is redirected and it goes from there.

The fact is, if you are resident in France you are only protected by regulation from the French authorities ORIAS and ANACOFI CIF. Terms of Business may be offered but if the advertising firms don’t display or confirm membership they should be avoided by anyone who has a concern for their future.

The Spectrum IFA Group are not tied to any financial institutions and we do not charge our clients a consultation fee. You can find full details of our Client Charter on our website

Glad to see this note. Brian, you may have opened a cans of worms. Since moving to France from Canada where I was a financial advisor I have been surprised at not only the lack of professionalism but the level of ignorance of the buying public. I will follow this thread. I hope that you put your money where your mouth is a keep this going.

Very well said. An advisor must also have expert knowledge of the French tax system. Some companies, like Senzo Conseil, take no fees from their clients... ORIAS n°11061569, ANACOFI-CIF n°E 003346

Good article by Brian. As I have said before on a previous posting. The first thing you should be doing is asking for the registration numbers to the organisations as listed in the above article.

We are always told to ask for a Siret number and associated ID when we employ an Artisan, so why not employ the same mind set when asking for financial advice when in France.

Am I alone in querying the word "independant" here? No criticism of the company Spectrum as such, but they say in their clients' charter they don't charge a consultancy fee but then "We are remunerated with commissions paid by financial institutions", presumably the very inistitutions you then invest in after advice from them? We were recommended by our accountant a company in Toulouse specialising in certain forms of life insurance, which have done us well, and LA has certain inheritance advantages here in France. However they too are renumerated by commission and they obviously only recommend firms who they have this arrangement with, so we have exercised caution and not relied entirely on them. It's rather as if I, an architect, were to get a commission from builders I suggested for a client's project (strictly illegal under RIBA and French Ordre Des Architectes rules by the way!) Which is why I charge fees direct to my clients, thus making me truly independant.

We used a company called Blevins Franks a few years ago. They purported to offer independent financial advice, then advised us to invest in a fund that was totally owned by Blevins Franks..I think it was called Aberdeen Direct, so no indication who it was owned by until we contacted Companies House. It left us feeling all financial advisors are crooks.