OpinionJul 17 2013

Key for advisers is adding value without boring clients

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I have never been able to engage with car salesmen. They want to talk about what’s under the bonnet. I want to talk about USB ports, hi-fi speakers, cup holders and useful storage.

I suspect the same goes on in personal finance: how do you engage with a public that inherently finds pensions, investment and insurance boring?

Personally, I love playing with numbers. Ask me to calculate a tax and national insurance bill and I am in heaven.

Working out the implications of different interest rates or charging structures is sheer joy.

But, I have noticed, when I present the astounding results of my labours to others there is a tendency for their eyes to glaze over.

I long ago realised that the best way to engage the interest of my news desk was to remove all specific numbers and replace them with adjectives and very large estimates.

Pensions are attractive not because you get 20 or 40 per cent tax relief but because you could pay thousands of pounds less tax.

I, as a journalist, can do this because I am not giving one-to-one advice, nor am I selling anything to anyone.

I can also engage people and explain in more detail further down the story.

All this, of course, does not sit very well with the obligations placed on financial advisers.

You must, for instance, show the actual effect of charges even if the numbers they are based on are totally spurious.

Investors are presented with documents in the name of compliance bludgeoning them with facts that most will not read and even fewer will understand.

The conundrum spreads across financial advice. How to engage people in a subject that is of vital importance without breaking the rules or boring them to tears?

The conundrum spreads across advice: How to engage people in a subject of vital importance without breaking the rules or boring them to tears

It will be interesting to see what effect auto-enrolment has. As the step-parent of a 23 year old I can tell you that a pension means absolutely zilch to him.

Now if you offered him a sports car that did 0mph to 60mph in five seconds and had a stack of brake horse power, that would be a different thing altogether.

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Pensioners in firing line again

HM Revenue & Customs is consulting on withdrawing mortgage interest relief on home income plans. This obviously fits in well with the current government practice of squeezing every last penny out of pensioners.

But why waste money on this consultation at all? This tax relief was withdrawn for new mortgages in March 1999.

It is estimated that less than 1000 people benefit to the tune of around £400 a year. It is not difficult to do the sums on this: the relief costs around £400,000 a year.

So it is peanuts to the Treasury but could have a huge impact on each of the individuals affected.

No doubt this is someone’s idea of a tidying-up exercise. But to change the rules and adversely affect people who are probably in their 80s or 90s by now would be inexcusable.

This consultation is open until 30 September. So why not take your chance to tell HMRC just how wrong they are to be even contemplating this change.

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Why wait to lift Nest cap?

What excellent news it is that the £4500 annual contribution cap and a ban on transfers into the National Employment Savings Trust are to be lifted. But why not do it now?

These restrictions were only introduced in the first place to pander to some in the industry who baulked at the competition to their own higher-charging pensions.

Lifting the restrictions will give workers a real choice and will mean they will not need to go to another pension provider if they wish to increase or top up their savings.

This would have acted as a serious disincentive to save more as many would no doubt have decided that searching for a second pension when they already had one was just too much effort.

In March 2012 the work and pensions select committee of MPs called for these restrictions to be removed as a matter of urgency.

And Nest chief executive Tim Jones said the restrictions were preventing members in its target market from having access to Nest, restricting employer choice and increasing complexity and costs.

So why must we wait until 2017 for these restrictions to be lifted?

Could it be that vested interests are still exerting pressure to protect their current positions?

It seems unthinkable that we would face this four-year wait without someone somewhere pressing for it.

Tony Hazell writes for the Daily Mail’s Money Mail section
t.hazell@gmail.com