Wealth Wizards has launched an automated ‘algorithmic’ abridged advice service for defined benefit (DB) pension transfers, following abridged advice from the regulator that it will be a permitted service for triaging clients seeking advice.

The Financial Conduct Authority (FCA) today set out a package of measures designed to address weaknesses across the DB transfer market, including steps to reduce conflicts of interest by banning contingent charging, as well as help for advisers which want to provide good quality advice to their customers.

As DB pensions are calculated by the amount of years in the scheme, the often large pots have been a target for bad advice and fraud.

An FCA market study found that there has been an improvement in the suitability of advice given over time, with the suitability of advice rising from a low point of 47 per cent in previous years to 60 per cent in 2018. However, the regulator said it remains concerned at the number of files which either appeared to be unsuitable or where there were information gaps.

Wealth Wizards welcomed the introduction of abridged advice, but suggested that the service could prove resource-intensive unless financial planners adopt technology to deliver it.

Chief executive Andrew Firth said: “Technology can streamline and modernise the market in the wake of the ban on contingent charging - it will enable advisers to automate key parts of the advice process, costing just a fraction of the traditional advice process.

"Relying on digital, compliant abridged advice will reduce risk considerably - this scenario will be both better for the adviser and for the client.”

The advice tech company has developed software to help financial advisers implement a digital ‘abridged advice’ service, automatically filtering out clients who are unlikely to be recommended for transfer without requiring the time and expense of a full advice service.

Firth added: “Many firms want to keep their fees at a minimum - particularly for those who should not transfer - by offering a quick ‘fireside chat’ to triage clients, but this is tricky from a regulatory perspective because it is likely to stray into providing a personalised recommendation.

“The answer is to automate the service with technology that is able to deliver fully-regulated abridged advice - this will speed up the triaging process, bringing down costs and providing a record of explainable and consistent outcomes, significantly reducing regulatory risk.”

The new digital service is part of a three-stage DB solution, fitting in with existing modules of Wealth Wizards’ flagship software-as-a-service platform, Turo.

Stage one comprises in-depth education and guidance and stage two is digital abridged advice. Stage three is an adviser led full advice service for those clients who are deemed suitable for a full DB transfer evaluation.

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