People won’t have a huge amount of money to play with at retirement.Paying off debt might be the right thing to do rather than try to get an income from a small amount of money.
As you go up the pot size scale I think people will invest. What concerns us is that the products they’re going to get are cost-effective.
A few people might buy a cruise. If you give people freedom they don’t necessarily do what they ought to do.
As long as people understand they’re going to be falling back on a pretty low state pension. They will also need to consider whether having the cash means they’re going to have to pay more later for long-term care.
It’s going to be important to have that conversation about options, but providers are not geared up for it. They wouldn’t be able to help themselves in terms of recommending the wrong thing.
Mas could do it, or Pensions Advisory Service. It needs to be an independent body.
It doesn’t need to be face to face. It is one of the jobs I do is on the board at [debt charity] Step Change. We know the phone can be very effective.
There’s no way of defining the difference between guidance and advice in a normal way. But by ‘advice’ I think generally the industry means regulated advice which ends up recommending a product.
Why did Mas end up with the word ‘advice’ rather than ‘guidance’? They upset both the financial advice and the debt advice communities.
The amount of money you need to invest before an adviser will even look at you has gone up. They won’t get out of bed, anecdotally, for £50,000 or less.
Those with smaller amounts are struggling a bit. The risk that gives rise to is the opening up of the non-advice market.
People go to a website, work through some questionnaires about risk and come out with a product. They think they’ve had advice because the sort of questions they’ve been asked sound like the sort of questions an adviser would ask.
The distinction between regulated advice and non-advice is completely lost on them, and why wouldn’t it be? It’s not language real people understand.
It’s not that there is anything wrong with that [non-advised] route. But it needs to be transparent. People need to understand what they’re buying.
There is a case for caveat emptor if the terms and conditions are completely transparent and people need to understand what it is they’re buying. That’s a lot of ‘ifs’.
There is suspicion the people who look at the Mas website are the same ones who read the personal finance pages, the ‘worried well’. Mas needs to reach out to other bits of the community because most people find their finances dull.
It’s about how to make it interesting and engaging and that’s a challenge for Mas. Virtually no other country has totally cracked this.
I would ban the term ‘annuity’. When people talk about their pension what they mean is usually their annuity. We need to change the language so it resonates with people.
Firms use a lot of jargon and then moan that people don’t want to buy their products. If you don’t know what you’re buying, why would you?
The FCA has brought a bigger consumer focus; it’s more action-orientated. We’d like to see more of course.
We don’t see individual complaints but we do look at the FOS figures. Banks get a lot more complaints than financial advisers.
