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PI costs push Mattioli Woods out of DB transfer advice market

National wealth management business Mattioli Woods has confirmed its decision to terminate its defined benefit pension transfer advice offering, due to increased costs and low demand

PI costs push Mattioli Woods out of DB transfer advice market

National advice firm Mattioli Woods has confirmed its decision to terminate its defined benefit pension (DB) transfer advice offering, due to the increased cost of obtaining professional indemnity (PI) insurance. 

In June, the firm stated it had been in dialogue with the Financial Conduct Authority (FCA) and undertook a full review of its work in this area. While the review was in progress, Mattioli Woods ceased providing advice for safeguarded benefits, including guaranteed annuity rates.

Mattioli Woods has now confirmed it will no longer offer advice on DB transfers. 

'Following consideration of the increasing costs of PI insurance, additional regulatory controls and the resources we would have to dedicate to a relatively small part of our business, we have decided to withdraw from this market and look to vary our permissions with the FCA accordingly,' said Mattioli Woods chief executive Ian Mattioli.

In a trading update covering the year ending 31 May 2018, Mattioli Woods said the departure from the DB transfer advice market would not have a material effect on the business. Pension transfer advice to individuals with safeguarded benefits currently makes up around 1.6% of the firm's direct revenue for the year, and less to profit as a result of compliance costs.

Mattioli Woods’ review of transfer advice business came after the FCA required every firm with DB transfer advice permissions to provide their data as part of a market-wide review.

The trading update also highlighted ‘strong, organic’ revenue growth of over 15%. Total discretionary assets under management were at £2.3 billion at the end of the year.

Total client assets rose to over £8.7 billion, as the company reported a strong financial position with net cash of over £20 million.

Mattioli added: ‘I am delighted to report another year of strong and sustainable growth, primarily driven by the flow of organic new business generated by our maturing consultancy team with over 1,300 new Sipp, SSAS and personal clients choosing Mattioli Woods during the year. 

‘We continue to enjoy strong client retention and have seen sustained demand for advice from clients, driven by lifestyle, increasing longevity, tax and other legislative changes, including the pension freedoms that introduced more flexibility as to how and when people can access their pension savings.’

Mattioli Woods will publish its final results for the full year ending 31 May 2018 on 4 September 2018. 

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