Although the government’s proposed ban on pension cold calling means IFAs now have even greater influence in advising clients to steer clear of scams offering fanciful returns, sadly though the lure of easy money will continue to seduce the unwary.
The reason? Well, Facebook for a start…….
Log onto the world’s favourite collection of kitten videos, selfies from the irredeemably vain, foam-flecked postings urging you to rise up and destroy the government/religious intolerance/Donald Trump/Remoaners/ Brexiteers/sugary treats (delete as appropriate) you will find folksy little homilies designed to change your life.
Live the dream – but mind the cost
A favourite among them is an image of a sad pensioner peering out of a rain-spattered window with the caption: “Don’t wait to do the things you’ve always wanted. Do it now – before it’s too late”.
And, frankly, you can’t argue with that. Before they shuffle off into that long, dark night, many pensioners want to “live the dream and begin a new journey”, as they would say on X Factor.
The old might be getting older (as indeed we all are) but they are healthier than they have ever been. While they may suffer a twinge or two in their replacement hips as they climb the gangplank of the luxury cruise liner, you will find them in the disco that night, boogy-ing away like Travolta’s grandparents.
One Sunday recently, I bumped into an acquaintance and asked where her husband was. “On the tennis court”, she said. “Every weekend he plays three sets”. I expressed my admiration (actually, it was jealousy), knowing he had recently celebrated his 72nd birthday. “Oh, it’s nothing special”, she said. “His opponent is 85.”
Time for truth
For the IFA, the opportunity to greatly strengthen trust in the industry exists. By extending their use of cash flow forecasting and using the output to have more of those honest conversations with clients about what exactly is the safe level of withdrawal that they are able to take from pension plans without jeopardising their long term financial security, is where real value is added. Even if it means the client has to accept it will only pay for a fortnight on the Norfolk Broads rather than Barbados.
The Treasury’s proposed ban on pensions cold calling is overdue, so I say well done to IFA Darren Cooke and all those who signed his petition, supported by Hargreaves Lansdown and Royal London, urging the government to act.
All that glitters
The number of pensioners and would be pensioners who have already been scammed is truly alarming. Citizens Advice estimates almost 11 million have been targeted by cold callers since April 2015, with savers reporting estimated losses of some £19 million between April 2015 and March 2016 – twice as much as for the same period in 2014-15.
And it could be even worse. The Money Advice Service estimates there could be as many as 250 million scam calls a year, while Xafinity Pensions Consulting reckon that as many as one in ten transfer requests could come from fraudsters.
There is, however, no accounting for naivety. My local BBC TV news programme recently reported on a chap who had pulled £100,000 out of his pension pot, and transferred it to a character who had phoned him promising lavish rewards for investing in diamonds.
It’s surprising that Her Majesty’s Opposition haven’t stormed the green benches looking to lynch George Osborne, whose pension “freedoms” when he was Chancellor are largely responsible for this mess.