Financial advisers have responded to a recent stream of criticism aimed at the government’s proposal for ‘free’ guidance by calling for it to be scrapped in favour of a voucher system offering ‘free’ advice sessions with regulated financial advisers.
While many have proclaimed the service, which the government has said will be delivered by bodies including the Money Advice Service and The Pensions Advice Service, will be a positive development and could boost full advice referrals, others have lined up to criticise the plans.
In responses to a Financial Conduct Authority consultation on how the guidance will work and be funded, much consternation has focused on cost and who should bear it. Others have suggested free services such as the guidance guarantee will more fundamentally undermine financial advice.
Speaking to FTAdviser, Anna Sofat, director at IFA Addidi Wealth, said that there is a lack of confidence in the government’s current approach. She instead suggested that those approaching retirement should be entitled to, say, £100 worth of advice to spend as they wish.
“This could be redeemed for an hour’s worth of proper financial advice and could be funded in part by the government and IFAs themselves. There would be an element of pro bono on the part of advisers, but I think most would step up to this.
“I think it’s a far better model than imposing a levy on the adviser community for guidance, because that cost will eventually come back to clients anyway.”
William Hunter, director at independent advice firm Hunter Wealth Management, also told FTAdviser that some form of voucher system would be preferable to the guidance guarantee.
“I think we’d be happy to give the first hour for free, so long as the government helped fund such a scheme. I just think proper advice is so essential, as opposed to the non-prescriptive guidance to be provided by organisations like the Money Advice Service, who I doubt will be able to do it in a meaningful way.”
Simon Linstead, director at Nurture Financial Planning, said that while most advisers supported the at-retirement reforms, the guidance piece was very contentious.
“I think it is hugely unfair that advisers should pick up the bill for this, and ultimately the consumer; a real benefit to people at retirement would be a ‘voucher system’ whereby they can redeem it with a qualified adviser for say a half hour consultation.
“However, I doubt however this will happen and at this time cannot see how truly beneficial guidance will be delivered.”
The Association of Professional Financial Advisers has predicted a hit of up to 5 per cent of profit for advice firms, while both SimplyBiz and Zurich have called for adviser levies to be capped. MGM has said the government should fund the first year of the scheme.
FTAdviser reported this morning on one listed IFA which raised concerns over the guidance marginalising full advice simply as the recommendation of a product.
