OpinionOct 27 2014

Back to good old fashioned adviser bashing

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Flicking through the money pages of the Times this Saturday, I felt as though I had been transported back in time (and before you ask: no, I was not reading the paper at 2am).

This week’s money column carried the incendiary headline, “The £1.5bn secretly taken from your funds”. Naturally, I felt compelled to read on, expecting to read about hidden trading, dealing or so-called ‘cash-for-access’ charges on investments that are obfuscated by annual management charges or obtuse total expense ratios.

Actually, it was a good old fashioned adviser commission rant. I haven’t seen one of them in a while.

There was a degree of nostalgia about it. I re-lived highly-charged pre-RDR debates about money being “siphoned” out of clients’ pensions and investments, about how each naive saver is being “treated like a sucker”, and about how because the contract is between the adviser and provider the poor customer in any case is “largely an irrelevance”.

It didn’t mention at any point the argument made by many that trail was and remains deferred sales commission, or the fact that the removal of commission has had its own consequences in terms of the contribution it has made to an advice gap which now threatens to undermine retirement guidance initiatives.

It did cover the fact that the RDR had removed commission, but only in the context of explaining how problematic it can be to move from the old model to the new and railing against the nefarious “bad behaviour of the past”.

To be clear: I’m not a commission apologist. I think transparency is important and that advice should be just that and not a trumped up sales masquerading as objective support; I wholeheartedly believe the twin moves to remove trail and professionalise advice will improve outcomes for clients and the prospects for the sector in the long run.

But I’m not sure scaremongering about old models, in a way that gives the impression invidious advisers are making mug out of their clients, is justified.

Most research shows fees charged now are broadly equivalent with the pre-RDR fees, they are simply more explicit. Most advisers also do not levy new fees on top of old commissions, suggesting there will be little of the “double-charging” of which the article warns.

This is particularly pertinent because just two turns of the page later was an article by the same author on the challenges facing retirees under the headline, “Times are changing: You cannot afford to act without advice”.

To be fair, it’s hardly a ‘love-in’ - at one point referring to advisers that have gravitated up-market since RDR as believing profit from small-pot clients is “so small they think you are not worth the bother”.

But it does offer space to Unbiased to counter the suggestion advisers generally won’t take on clients with less than £50,000, and it points to significant savings in tax and other areas which would more than offset the £175 an hour average charges quoted.

I and many others would absolutely agree that advice is going to be critical in the new world, especially for those looking to go into drawdown or other previously non-mainstream (or unavailable!) options. Even Steve Webb is keen to push the case for advice on the back of guidance.

I’m therefore glad the Times chose to highlight the value and importance of advice; it’s just a pity that it and the author did so in the same metaphorical breath as it took to throw out some injudicious and largely unfair language over adviser practices.