Case Study · When the obvious answer isn't the right one
Beware the One-Trick Pony
A client came to us worried about advice he'd already received: transfer the pension overseas, whatever the circumstances. We found the transfer had never been tested against his wider plans, and had cost him far more than he knew.
- The situation
- A UK pension already transferred overseas on a previous adviser's recommendation
- Key areas
- PensionsTaxEstate Planning
- The outcome
- The true cost of the original advice, uncovered and under review
The situation
A client came to us concerned about advice he had already received about his pension. The advice had effectively been the same whatever his circumstances: transfer the UK pension fund into an overseas pension scheme.
We have been involved in international pension planning for many years, and a pension transfer succeeding is not the measure of good migration planning. A pension is only one part of a much bigger financial picture.
Where things became complicated
Future plans
The client had no intention of remaining overseas permanently, but his future residence had not been part of the original advice.
Estate and tax
His inheritance tax position, and his wider tax and estate planning needs, had not been considered alongside the transfer.
Cost
He had been told there were no fees for the advice. In reality, the adviser firm received more than £30,000 on a £350,000 transfer, built into the product rather than shown to him plainly.
The Montfort approach
01 Review
We examined the client's full circumstances, not just the pension that had already been transferred.
02 Uncover
We investigated the arrangement in detail and found the remuneration that had been generated through the product and structure used for the transfer.
03 Establish
We concluded the pension should never have been considered in isolation. Whether an overseas transfer is right depends on residence, taxation, estate planning, access to benefits and long-term intentions, considered together.
04 Pursue
We are now examining the circumstances of the original advice and the remuneration received, to determine whether some of the client's money may be recoverable.
The turning point
Beware the one-trick pony.
International financial planning should not begin with a product and then find a reason to sell it. It should begin with the client: where they are today, where they intend to live tomorrow, what they want their money to achieve, and what the wider tax, financial and estate-planning consequences might be. Sometimes the most valuable advice is knowing when not to transfer a pension at all.
The outcome
The client now has a clear picture of what happened and why the original transfer did not fit his circumstances. We are examining whether some of what was paid to the previous adviser may be recoverable.
More than £30,000 was received by the previous adviser firm on a £350,000 transfer, a cost that was never made clear to the client.
What this case shows
01 Look at the whole picture
A pension transfer can look reasonable in isolation and still be the wrong decision once residence, tax and estate planning are considered.
02 Ask what it actually costs
“No fee” advice can still come with a significant cost, built into the product rather than shown as a charge.
03 A transaction isn't always a solution
A transfer being possible is not the same as a transfer being right.
Understand your financial life
Montfort combines financial planning with education and coaching, so clients understand not just what to decide, but why. Being an informed client is often what makes the right decision possible in the first place.
Client names and certain identifying details have been changed to protect confidentiality. The circumstances and planning challenges described are based on real client experiences.
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