OpinionApr 2 2014

Budget brings happy days back for advisers

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For better or for worse, I meet a lot of independent financial advisers in my travels along the byways and highways of this magnificent country.

Strange though it may seem, I even occasionally dine with a select few advisers on the grounds that they are usually extremely good company. ‘People’s people’, as my father would say – he was a commercial salesman who, when on form, could sell snow to Eskimos – who like a drink (journalists and drink are also like Siamese twins).

In recent years, however, the demeanour of many of my closest adviser (financial planner) friends has changed for the worse. Despite still driving standout motorcars (advisers like their status symbols, I am reliably told), and being consummate professionals, they are increasingly susceptible to terrible mood swings.

A dinner party or night out now seldom passes without some grumble or other from a fidgety adviser, whether it is about the enormous cost of regulation, the need for yet more meaningless examinations, the increasing FSCS levy, or the continued ramifications of the RDR.

“We’re all going to hell in a handcart”, is a familiar cry, usually followed by a confession that they have had enough of being independent and they are off to join the happy-clappy land of milk and honey that is St James’s Place.

Grumble, grumble, grumble – it’s enough to turn a listener (journalist or no journalist) to even more drink.

Yet last weekend (post-Budget) was different, very different. For the first time in many a year, my adviser friends made no mention of their perpetual gripes about regulatory man and beast.

Not a whisper or murmur of despair. Instead, they were happy. No grumble, grumble, grumble. Just smile, smile, smile. All is good in the financial adviser world again. Large brandies all round.

Of course, the trigger for this seismic shift in the mood of advisers small and large was the chancellor’s unexpected decision in the Budget to revolutionise the pensions market by handing back control of pensions to those who had the good sense to take them out in the first place. Out with the nanny state; in with the rights of individuals to determine their own financial destinies.

It was a bombshell of an announcement (I never saw it coming) – and, of course, all very empowering for individuals (and about time too).

Such freeing up of pensions has been something I have been demanding for many years on the simple grounds that a prudent saver invariably makes for a prudent pensioner. Prudent savers should be allowed to do what they want with their pensions rather than be bullied and beaten into taking out a paltry annuity.

George Osborne has now given them the freedom to do so from April 2015 – provided, of course, that powerful vested interests (insurance companies and the regulator) do not get in the way.

But back to my adviser friends. Mr Osborne’s Budget was all very stimulating for the financial adviser industry. With the liberalisation of pensions come financial planning opportunities – the chance, at last, for good advisers to demonstrate their wares.

Some advisers I spoke to in the wake of the Budget say the chancellor has put pensions centre stage again. As professionals and practitioners, they are now more excited than they have been for many a year. Indeed, some say they have not been so stimulated since income drawdown first came on the scene nearly 20 years ago.

I think these advisers are right to be happy. As I have argued in this column many times, pensions have been systematically vandalised over the years by constant political interference: the infamous Gordon Brown tax raid of 1997, constant changes to the suffocating rules surrounding income drawdown, and restrictions applied to both annual and lifetime allowances.

All this, along with low interest rates, has undermined pensions as a long-term savings vehicle.

However, Mr Osborne’s latest ‘interference’ is just the tonic the pensions market needed. It means people can now save, confident in the knowledge that their often sizeable pension pots will not necessarily be turned into a monthly stream of derisory income. Instead, they will be able to take income when they need it – and want to enjoy it – and, with careful tax planning, will not be taxed up to the hilt for doing so.

It also means pensions can once again assume the mantle of being the saver’s best friend – a position that Isas had threatened to take. All right, they might not be quite as flexible as Isas (affected as they are by age restrictions) but they are now not far behind.

Pensions can once again assume the mantle of being the saver’s best friend – a position that Isas had threatened to take.

And, most importantly as far as trusty Financial Adviser readers are concerned, it all means that independent financial advisers can now go about their work with a fresh spring in their step.

No more grumble, grumble, grumble. Just smile, smile, smile.

Jeff Prestridge is personal finance editor of the Mail on Sunday