Surprise, surprise

This summer, I was minding my own business in a log cabin in a forest in Canada. I had just about recovered from falling bottom-first into the lake from a (parked) canoe and ruining my five-day-old Nikon P610, when my husband rushes back from the main lodge, where wi-fi is provided by a donkey tied to a mill that grinds electricity.

“We have a new parent” he gasped. I read the FT’s declaration: “Nikkei is to buy the FT Group from Pearson for £844m with an eleventh-hour offer for the London-based news organisation.”

I leave the sodden camera in the sunshine (hoping for a miracle), and head towards the lodge. When I finally get online, I also see that Martin Wheatley of the FCA is stepping down later this year, and I’ve received tweets from the newsdesk ribbing me for going away at an exciting time.

When I finally return to the UK, to a place where wifi is not a privilege but a pandemic, I discovered that Our Lady of Liverpool, Cilla Black, had died. I can’t stop singing:

‘And when you don’t know what’s in store today/That might bring surprise’.

But if I thought it was going to be a quiet return to the office, another surprise ‘hit me between the eyes’ - the FCA and HM Treasury announced what could herald immense upheaval in the way financial advice is provided.

I’ve read approximately 30 responses to the new joint review of the financial advice market. Mike Kellard, chief executive of Axa Wealth, called it a much-needed, long-overdue review.

He said: “When the RDR was announced, we were vocal about our concerns that this would drive out access to financial advice for those in ‘middle Britain’. We may have been regarded as a ‘doom-monger’ at the time, but it seemed an obvious consequence of the then much-needed reforms.”

Add to this the glorious statement that everyone should get free advice - and it is clear government’s Right Hand and Left Hand have no clue what the other is doing. Kellard’s right: everything Whitehall does has unintended consequences it then spends years, and money, trying to rectify.

On the one hand, it is propelling people towards free and impartial pensions advice with the pension freedoms. But just a few years ago its regulatory arm the then FSA created a situation whereby many people found they could no longer afford financial advice.

After the RDR, banks shelved thousands of workers. Large IFA firms ditched people whose portfolios were less than £100,000 in size. Many small advisory firms were sold or assimilated into larger ones. Others closed their doors.

Then along comes the pensions freedoms and the largesse of Osborne who wants ‘advice for all’ - even those for whom it’s unattainable, unavailable and unnecessary - and boom! Suddenly government is aware of the problem.

To wit: there just ain’t enough affordable advice for it to meet its promises, thanks largely to the way in which the needed RDR reforms were pushed through.

So what does government do? Launch a review! Surprise, surprise.

There’s an indentation in my desk where I have spent the past two days back in the office banging my head. It’s less painful than falling into a lake.

We’re not back to square one, admittedly. Essentially, we’ve moved onto a different square like some pawn in the government’s financial services game plan. And I’m not sure this review will actually achieve more than create sound and fury, causing upheaval and forcing more costs on the delivery of advice just so people like me can get advice.

Hargreaves Lansdown has it right: Not Everybody Needs Advice. We don’t. We need help, knowledge, education, information. But this government seems to think people should be protected at all costs from making stupid decisions. This is completely counter-intuitive. It’s counter-evolutionary. People only learn from their mistakes.

If my mum wants to blow her lump sum on a souped-up GTI with a flashing strip, it’s her money. She shouldn’t have to get an adviser to sign a form saying he didn’t think she should do such a frivolous thing, but stating that she insisted on it anyway.

According to responses to this new review, the mantra is now “robo-advice, here we come”. Technology will help bridge the gap, fill the chasm, bring financial advice to the masses at lower cost to both consumer and adviser.

Something else that happened while I was away was the publication of a new report from McKinsey.

Its report was called The Virtual Financial Advisor: Delivering Personalized Advice in the Digital Age.

As you can tell from the spelling, this was for the US market. It said: “The prospects for robo-advisors are in no way proportional to the remarkable hype accorded to them.

“So far it is not clear whether these firms can move beyond simple investment solutions, capture non-millennial investors at scale, or replicate the trust and intimacy of a human advisor.”

ROBO ADVICE CANNOT REPLICATE THE TRUST AND INTIMACY OF A HUMAN ADVISER.

If this is truly where this new review is going to lead, then this is yet another RDR-style disaster waiting to happen: a great idea, executed poorly at the whim of some policy-maker.

Come on, government. Stop a) making stupid promises that advisers will have to keep and b) trying to fix your folly with the regulatory equivalent of duct tape and a wrench.