Government needed to get guidance right first

So, why didn’t the government make sure the guidance that’s given to those facing retirement was excellent before it threw open the doors to pension vaults and let your clients grab as much cash as they want to?

Your reaction to the announcement that the Work and Pensions Select Committee is launching an inquiry into advice and guidance on pension flexibility changes should tell MPs all they need to know about the impact of their decision to give savers greater freedom to do what they want with their retirement cash.

Advisers are having to deal with calls from their clients who simply do not want to hear what is the best course of action to ensure their pension pot sustains them up until the day they die.

These clients just want their advisers to sign the form to say they have sought advice and can take their cash – regardless of the consequences.

If a highly educated, experienced and well informed financial adviser can’t dissuade these individuals from blowing the lot on a holiday or super car to make Jeremy Clarkson jealous then what hope is there for a swiftly recruited Pension Wise employee?

Pension Wise providers had a matter of months to hire their staff and set up a service that will provide guidance which “is not designed to replicate professional financial advice”.

All Pension Wise will provide is tailored information to consumers on the options available to them, but, unlike financial advice, it will not recommend specific products or providers.

The committee of MPs will now look at whether people are adequately supported in making good, informed decisions about their retirement savings in light of the changes on access to pensions and pension drawdown introduced in April 2015.

Pension Wise providers had a matter of months to hire their staff and set up a service that will provide guidance

It is calling for written evidence on take-up, suitability, affordability and independence of the advice, guidance and information available to those approaching retirement; and recommendations for improvement.

Without doubt these MPs are going to find the support is inadequate.

A good financial planner will look at a person’s investment strategy over the long term, with the right level of protection in mind.

Rather than just throwing clients the keys to their pension piggy banks, the government needed to make sure savers could access affordable, well informed financial advisers who were given the power by the regulator to make the decision as to whether the keys should be handed over or not.

If the client still wanted to access the cash and ignore the adviser’s recommendation then the client should be handed a document stating they can make no claims for compensation or even be eligible for means-tested state benefits.

I await the findings and recommendations of this inquiry with interest.

emma.hughes@ft.com