Transferring clients' assets between organisations can be a major headache - often time consuming, frequently frustrating and possibly uneconomic. Paul Pettitt explores whether there is an easier way

Right now, most pension-to-pension and pension-to-annuity transfers are cash based. Customers' assets are sold and all of the resulting cash is re-invested, leading to potential taxable events. Cash is fine for many transfers, but not all transfers. Given the broad agreement in the industry that a significant amount of assets will transfer from place to place in the coming years, it's clear that a simple, quick and holistic way to transfer assets is required.

Re-registration
As most of us know, assets can also be transferred 'in-specie'. Instead of selling the assets, the name recorded on the fund register is simply altered from one provider to another. This process is known as 're-registration' and as customers' assets remain invested throughout the process, they are therefore not subject to potential taxable events.

Additionally, the re-registration transfer process takes away the element of out-of-market risk from the customer as their assets are not cashed in, and then re-bought, during the process. Combine the ability to do a cash transfer, with an in-specie solution, and this takes care of all your pension transfer needs.

Timing is everything
This is all well and good, but there still remains the issue of timing, as to do an in-specie transfer for a customer can take a long period of time. There are numerous forms that need to be completed to satisfy the different information requirements of the businesses involved in the transfer. What this can mean for your customers is that while in-specie transfer is best for the transfer of some assets, it can still be far from ideal.

However, better processes can be found. For example, prior to 2008, cash transfers took on average 51 days to complete. Since Origo launched our options service to help customers exercise their open market option in 2008, that time has reduced to nine days.

Bringing the industry together
Fortunately, help is at hand again. Work is well underway to automate as much of the process of re-registration as possible to match the progress made previously on cash transfers. The information required will be standardised, the form filling will be reduced, and the transfer of assets will be done electronically - all with the ultimate goal of reducing in-specie transfer time to a handful of days.

As with most complex issues in the financial services world, a degree of collaboration in the industry usually serves to provide a better solution than individual companies working alone can - and with the help and support of TISA, an automated solution with the following key goals, is within sight:

l Transfer of assets should be efficient and smooth so customers have confidence in the transfer.
l Be simple for advisers to manage, reducing time spent on administration.
l As automated as possible, reducing costs from both advisers and product providers.

Written by Paul Pettitt, managing director of Origo

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