Not upheld: Pension transfer advice complaint against JM Independent Financial Advisers Ltd

Decision detail

Summary

Miss J complained about advice from JM IFA to transfer £200,000 of her £587,000 pension to a SIPP, arguing the recommended funds were too risky for her moderate risk profile and that charges increased without proper disclosure. The ombudsman found that while the transfer did increase her risk exposure (FE Risk score from 49 to 77) and charges rose by approximately 0.39-0.46%, the overall portfolio remained aligned with her moderate risk profile. The majority of her pension remained in the original lower-risk fund, and when considered alongside her partner's position (both having over £1 million in a single fund), the diversification benefit was reasonable. The ombudsman concluded the advice was not unsuitable, as the resulting portfolio composition was consistent with moderate risk investor benchmarks and provided appropriate balance through the combination of the original fund and new equity-based funds.

The Ombudsman's reasoning

The ombudsman found that while the degree of risk increased following the transfer, it remained within Miss J's agreed moderate risk profile when considered in context. The ombudsman accepted that transferring some money to another provider for diversification was reasonable given that both Miss J and her partner had their entire holdings in a single fund. Although the new funds presented higher risks and were largely equity-based, the majority of Miss J's pension (two-thirds) remained in the original lower-risk fund, providing balance. The ombudsman considered the portfolio both on Miss J's standalone basis (65% equities) and combined with her partner's position (55% equities), both of which were consistent with moderate risk investor benchmarks. The ombudsman acknowledged that different professionals can have different reasonable opinions about risk and that portfolio construction is not an exact science. The increased charges, while material, were not considered determinative given the diversification benefits.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website