Former shadow pensions minister Gregg McClymont has suggested one solution to the ‘advice gap’ would be to expand guidance services to give individuals a better idea of their options, whilst stopping short of an actual recommendation.
Speaking yesterday (4 February) at a TUC pensions conference, Aberdeen Asset Management’s head of retirement savings commented: “Most people see advice as a different world... it would be more sensible to expand guidance and give people simpler options.”
He argued that rather than there just being a financial barrier to advice, its actually more of a cultural gap, pointing out that “most people have never taken financial advice, nor do they know anyone who has”.
Therefore, expecting financial advisers to solve this problem is unfair, as the issue at the heart of the Financial Advice Market Review is essentially one of demand.
“One way to approach the demand problem in the mass market would be to expand guidance so that Tpas [The Pensions Advisory Service] or another body could explain options in detail to individuals, while of course not providing an actual recommendation; which would be advice.
Mr McClymont added that his wider view was that financial advisers must not be tasked with solving a ‘gap’ they did not create and that the reasons individuals do not take financial advice, or indeed guidance, are complex and not solely or mostly about the price tag.
Earlier this month, speaking to FTAdviser’s sister paper Investment Adviser, he warned that further pension reforms could “signal the end of occupational and retail pensions as they have been understood in the UK for nearly a century”.
In opposition Mr McClymont was critical of many aspects of government pension policy, but last March he conceded that his party would monitor, but not unwind, the pension freedoms.
peter.walker@ft.com
