What’s the difference between a Tuna and a piano?
You can tune a piano but you can’t piano a Tuna.
What’s the difference between Financial Advice and money advice?
This is however, no joke. Financial advice is about the choices we have to make when considering how to make investments and pensions or where to put savings. Money advice is about helping to manage money to try and make sure there is enough to live on, particularly when money is tight. While your local CAB offers free money advice it does not provide Financial Advice which should be obtained from an Independent Financial Adviser authorised by the Financial Conduct Authority.
Changes to how you can manage your pension pot were announced in the last budget. If you want to know how these might affect you don’t get involved with any company which has contacted you out of the blue by phone, email, text or via an online advert about getting a ‘free pension review’ to ‘get better returns’. Most of the companies making these offers haven’t been authorised by the Financial Conduct Authority (FCA), even though they say they are acting on their behalf. If you are contacted by one of these companies, ignore them. Professional advice on pensions isn’t free and financial advisers authorised by the Financial Conduct Authority are unlikely to cold call. Companies might also say they’re representing the government about free retirement guidance – an initiative that’s not been launched yet.
These reviews are aimed at getting you to move money from an existing personal or occupational pension into other schemes called self-invested personal pensions (SIPP) or small self-administered schemes (SSAS). There is nothing wrong in participating in such schemes provided the investments are made with the benefit of advice from an FCA approved Independent Financial Adviser. Accepting advice from a firm which contacts you without being asked will probably lead to the pension pot being invested in unregulated investments like overseas property developments, forestry or storage units known as store pods. These are higher risk and you could lose everything you’ve invested.
If you invest your pension in one of these schemes you won’t be able to complain to the Financial Ombudsman Service or get compensation from the Financial Services Compensation Scheme if things go wrong. You are also unlikely to be able to get your money back if you’ve dealt with an adviser who isn’t authorised by the Financial Conduct Authority (FCA).
Five top pensions tips.
- Always check anyone offering advice or financial services is authorised by the Financial Conduct Authority
- Get independent advice from an authorised financial adviser if you want to review your pension arrangements.
- Make sure you understand how investments work, the risks involved and what they mean for you. Your adviser should consider whether they are suitable for you.
- For most individual investors, investing your pension money in unregulated investments is unlikely to be in your best interests unless you have expert Financial Advice.
- Consider all investment options – leaving your pension pot where it is may be the best decision.
If you have a question or concern about a financial service or product, you can contact the FCA Consumer Helpline which offers impartial information and general guidance and also provides contact details for other organisations. The numbers are 0800 111 6768 (Freephone) or 0300 500 8082(local call charges apply).