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Retirement planning can be a daunting prospect, and one of the most important decisions to make is how to manage your pension pot. While some people prefer to rely on professional advice from financial advisors, others are turning to DIY retirement saving. In this blog, we’ll explore why managing your pension pot yourself could be more complicated than you think. You can also learn more from one of our YouTube video where we discuss the matter.

DIY Retirement Savers

The rise of DIY retirement savers has become a growing trend in recent years. A DIY retirement saver is someone who wants to transfer their Final Salary scheme and then invest the money themselves without oversight or ongoing management. While this may seem like an attractive option for those who want more control over their pension, it’s not always the best choice.

The FCA 2015 Legislation

In 2015, the Financial Conduct Authority (FCA) implemented legislation that required individuals with Final Salary Defined Benefit schemes over the value of £30,000 to take regulated and authorized financial planning advice from an authorized pension transfer specialist. This legislation was put in place to protect consumers from bad advice in the past and ensure that individuals receive the right advice before making any decisions about their pension pot.

Extra Work and Cost for IFAs

The FCA 2015 legislation created a lot of extra work and cost from a financial advisory perspective. Financial advisors now have to provide regulated and authorized financial planning advice, which requires a higher level of expertise and skill. As a result, financial advisors have to pay insurance premiums every year to ensure that they are protected in case of any event where they are sued for providing bad advice.

Understanding the Context

To understand the context of the FCA legislation, we have to look back at the past. Before 2015, there was a lot of bad advice in the financial industry, specifically on Final Salary pension schemes. As a result, the FCA deemed that the majority of people transferring pensions before 2015 should not have transferred their pension. The new legislation brought in a higher level of protection for consumers and a more regulated process for financial advisors.

Clients with Financial Background

For clients with a financial background, managing their pension pot themselves may seem like an attractive option. They may feel confident that they have the expertise to manage their pension pot and save money by avoiding ongoing advisory fees. However, financial advisors need to consider whether it’s appropriate for the client to manage their pension pot without oversight or ongoing management. If a client has no previous experience managing money, it’s not ideal for them to manage their pension pot themselves.

Should You Manage Your Pension Yourself?

The decision to manage your pension pot yourself ultimately depends on your experience and comfort level. Financial advisors will consider each case on a case-by-case basis, and clients must show evidence that they have the experience and expertise to manage their pension pot. The fees associated with transferring a Final Salary pension can be expensive, but the process is complicated and requires a high level of expertise.

The DB Market ‘Shrinking Down’

Currently, the DB market is shrinking dramatically, and the number of advisors staying in the industry is getting less and less. It’s a difficult market to work in, and many advisors don’t want to deal with the extra work and cost associated with providing regulated and authorized financial planning advice. The balance of financial advisors trying to stay in the market to provide advice and the growing number of DIY retirement savers is making it difficult for firms to remain profitable.

The Bottom Line

In conclusion, managing your pension pot can be a complicated process that requires a high level of expertise. While DIY retirement saving may seem attractive, it’s important to understand the regulations in place and seek advice from a professional financial advisor.

Cameron James is here to help you make informed decisions about your pension pot and ensure that you receive the right support and expertise. By working with one of the IFAs at Cameron James, you can receive personalized guidance that meets your specific needs and goals. If you’re considering managing your pension pot yourself, book a free initial consultation with one of our IFAs today to learn more about how we can help you.


Dominic James Murray

My career in financial services began in 2010 during my Bachelor of Science (BSc) Undergraduate degree at Aston University in England. The degree required me to spend a year abroad working with an established organisation.

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