If you are switching money between pensions to a SIPP or Qualifying Recognised Overseas Pension Scheme (QROPS), you need to know who you are dealing with.
Besides a home, a pension probably represents the largest single amount of money most people have, and ensuring financial advisers are honest and trustworthy is a priority before handing the cash over.
The problem is how to confirm the integrity of a financial adviser when so many fraudsters are out there.
Financial regulation is tightly controlled in the US, UK, most of the European Union and other financial centres such as Australia.
Elsewhere, dealing with someone of integrity is more of a lottery. Checking out an adviser comes down to taking some time to dash off a few emails or make some calls. Here’s what to check:
1. Do some digging
Ask for the adviser’s qualification and regulatory status – this can be independent or restricted.
Independent advisers can offer products and services from across the market, but restricted advisers can only talk about a limited number of products – such as a bank or insurance company agent who can only discuss those offered by their firms.
Contact the organisation awarding the qualification or registering the adviser to make sure they are telling the truth. Many expat advisers have no qualification or regulated status.
2. Nothing is free
Many IFAs cannot offer free pension or investment reviews because this is forbidden by law in the UK. Instead, they must charge a fee.
Beware free advice, because if you are not paying for the adviser’s time, they are earning commission from a provider.
3. Secret agents
Be careful of advisers working as an agent referring your business to another firm. This generally means they do not have the qualifications and regulatory status to give advice.
Dealing with an unregulated adviser means losing any consumer protection offered by financial compensation services.
The bottom line is retirement savers could lose all their retirement savings without have any way to get the money back except for relying on the vagaries of foreign courts.
Dealing with a dodgy adviser just does not make sense to save a few pounds when so much more is at risk.