If you have a headache, there are several things you can do. You could take a couple of painkillers and wait for it to go away. You might search online for your symptoms and conclude anything from being a bit dehydrated to suffering from a brain tumour. Or you might visit a doctor, who can use his or her expertise to figure out the source of your headache and take appropriate action based on your circumstances.
The same can be said for financial advice. There are the DIY-ers: those who figure out their own ‘plan’ and, if they’re lucky, won’t do too much damage. There are the internet searchers who, even if plenty of information is presented to them in a sensible way, can easily come to the wrong conclusion. And there are those who seek full advice, presuming they have the funds to do so, and get a proper recommendation designed especially for them.
The middle ground, typified by the Money Advice Service (Mas), is the most controversial because of its ambiguity. Is it real advice or is it simply lots of information that may or may not point to the right answer?
It comes as little surprise that the Mas – or ‘Ma’ if we go by its riveting marketing campaign – has come under a scathing attack by the Treasury Select Committee (TSC). It has questioned the point of its existence, criticising it for not consulting with existing similar services prior to becoming operational and therefore duplicating much that already exists. It pointed out disproportionate spend on marketing (good to know your Mas levy is going somewhere useful, right?) and queried whether it should be addressing issues that are currently more relevant, such as debt advice. In fact, it is setting up a “debt advice service” – perhaps those same marketing gurus can suggest you ask Ma and Da for advice.
All in all, the TSC is “unconvinced that the Service has adopted the right strategy or that it currently performs the correct role”. Ouch.
To give Mas some credit, some of what it does isn’t too bad. It does provide pretty comprehensive information on a range of subjects. I was recently researching retirement income options and found it had a reasonably useful guide on the different routes available.
But many product providers and advice firms offer exactly the same information for free on their websites. If Mas is to be truly effective in filling the advice ‘gap’, it must offer something more. What about this ‘simplified advice’ idea that the regulator was so keen on prior to the RDR? If anyone is to offer that, surely it should be Mas.
The need for financial advice does not go away simply by creating a website and an expensive advertising campaign. A recent survey by Apfa suggested that as many as 60,000 individuals have been turned away by financial advisers because their service would not offer good value for money. A site full of information will tell me what options exist in the market, just as NHS Direct will tell me all of the conditions that can cause a headache. What it doesn’t tell me is what I should do based on my circumstances. But neither will a financial adviser if I can’t afford one.
Mas perhaps deserves some sympathy. It has not had an easy ride. Right from the start, it was criticised for using the term ‘advice’ in its name, a term actual financial advisers hold dear. It always defended this as a point of linguistics, pointing out that most people see both advice and information as similar things. Any adviser who has gone through the financial planner exams will know that they are two very different things. And this is the crux of the problem for Mas: if you say you are an advice service, you should provide advice.
Not in the same way as a financial adviser – that could not possibly be done on the budget allocated to the scale required. But you should not just provide reams of information either, and certainly not information that can be found elsewhere. Yes, having information in one place is useful, but in terms of actually taking action on individual circumstances it is ultimately no more helpful than if you had gathered knowledge from several sources.
Mas needs to get its act together. It should not be looking to replace advisers, but should be looking to support those who will never be able to afford one and support them in a way that goes beyond publishing words on a website and encouraging discussions with an imaginary ‘Ma’.
