Finally: QROPS advice – fair, independent and at transparent, low costs
For many years I have established a track record here on Toytown with critical comments about what has been offered as QROPS transfer advice by certain pyramid structure sales companies in Germany and elsewhere.
More often than not, these “advisors” were (and still are) not properly licensed/registered as advisors and not really qualified to offer any valuable investment or pension advice.
The pension plan solutions they sold were usually extremely expensive with frontloaded commission costs (often around 7% and more) and there were also very high additional costs coming from kickback commissions from the underlying investment products and churning of the investments (i.e. changing and re-selling constantly new investments in order to generate more commissions).
Plus, also more often than not, too risky investments like auto-callable notes (derivatives) were sold within these pension plans that created huge losses to the investors. And at least under German regulations, based on a number of court decisions, derivatives are not suitable as part of a pension planning strategy in general.
Because of all those bad examples and the sad cases of malpractice I have seen all these last years, I have mostly stayed apart from this area of advice as I did not want to endanger us to be tainted by the same brush directly or indirectly. Though I have helped a number of such clients in their pursuit of going after the bad advisors and getting their money back (sometimes with success even!).
Recently, though, I have been approached by a growing number of clients to help them organize a transfer of their UK pension pots or out of bad QROPS plans or SIPPs to which they have been sold in the past. Many are afraid of what a hard BREXIT can mean for their pension pots, others have learned from my critical articles that there is a lot of bad/poor advice out there for QROPS transfers and seek something better.
So, finally, we decided to set up an advice process that fits our high ethical standards and the needs of the clients.
Our advice process follows the UK recommendation that we shall look entirely unbiased at the pension situation of an interested client and assume at the beginning that it is in the best interest of the client to leave his or her pension pot in the UK, specifically for DB (defined benefit) schemes. However, we understand that there can be ulterior motives for anyone who lives in Germany and plans to remain here (or at least within the EURO-zone) for the foreseeable future to shift his UK-based pension towards one within the EU. Fear is never a good advisor in finance, though. Even we as professional and experienced advisors cannot claim to have a better grasp of what the future may hold for the status of the UK towards the EU after the BREXIT and if the British pound loses further in value compared to the EURO or not as anyone else. Yet for most people, the additional uncertainties that exactly these issues bring into their pension planning and an ongoing currency volatility of a large share of their pension capital can be good reasons for transferring the pension capital out of the UK, even if that comes with some pecuniary losses. Peace of mind is an intrinsic value that should not be underestimated in pension planning.
What is important, though, is that interested clients receive a fair assessment of the value they are giving up with their existing pensions as compared to what they will invest in when transferring their pension capital out of existing plans in the UK. And they need to have a full understanding of the costs involved, too….something that too often has been hidden behind smoke-screens at other IFA companies who sold overly expensive QROPS pension plans to the unsuspecting Expats.
Here is what we at Chambervelt, Rooselain and Cie. offer to Expats in Germany considering a transfer of their pension capital from the UK to Germany or to an offshore location:
Step 1. A full assessment of your financial situation, including all existing investments and pension plans (and, strongly recommended also: your existing insurance coverage). This comes with a flat fee of around 780.- to 1.170.- EUR (depending on volume of the capital to be transferred and number of pension plans involved). This includes a full financial status, a personal investor-profile-assessment (which guides us then to find a diversification of investments that really fits to your personality and your wishes and goals for the future). Coupled with this we shall then generate quotes from QROPS-compliant pension assurances both within Germany and Offshore. These pension plans are commission free plans entirely, there will be no hidden costs for you that reduces any chances of making a fair yield with your pension plans over time.
Step 2. For all pension capitals in excess of 30.000 GBP a full analysis is required by UK regulation thru UK registered and specialized/accredited IFA. We have a cooperation with such a respected and experienced IFA in the UK that will deliver such an analysis and report for a flat fee of 1.700 GBP.
Our IFA partner’s services contain a Suitability Letter, which explains the pros and cons for you of such a transfer; a Transfer Value Analysis Report ("TVAS") that explains the value of your existing pension plans in comparison to the options offered from our side in Germany or Offshore. Finally a cashflow drawdown report and any ancillary documents as required for the advice to remain valid.
Step 3: After you received all of the above, you have to options:
a) you can decide to keep your pension plan in the UK. If you like you can authorize us then as your financial advisor to optimize the existing plan and manage your investments there against a yearly fee. IN many cases this will be preferable to an actual transfer out of the UK
b) Or you can decide to go ahead with the transfer. In which case we will prepare and process all necessary documents for the transfer of the capital until it has safely arrived at its new pension plan destination. We, again, offer this, for a fee of 1.5 % of the capital to be transferred (which, in some cases, can be paid out of the capital transferred, btw). And of course, we can then also offer to manage the underlying investments for you for a yearly fee in the following years if such management is requested or recommendable.
If you compare our process to the many “offers” out there on numerous websites offering some form of QROPS advice or assistance, you will easily find that our QROPs advice is much more transparent in both what we offer as advice and what we charge for this advice and services. Sure, there is no free lunch being offered here - we are, after all, running a business. But we have a long track-record of working in the best interest of our Expat clients here in Germany as independent broker and advisor. There are no hidden fees and nasty surprises. And because there are fees being charged in increments at every step, the advice can remain unbiased and in your best interest rather than those who need to rely on gaining a huge commission only if and when you really finally transfer your capital out of the UK.
I hope this helps to fill an advice gap that many Expats have lamented to us and here on Toytown in the past. I look forward to your inquiries.