There is no contradiction between offering free guidance for retirees and supporting regulated financial advice, pensions minister Steve Webb said yesterday (26 June) as he faced criticism from an IFA during an Age UK event in London.
During a panel debate on financial resilience in later life last night (25 June), pensions minister Steve Webb was attacked by financial adviser Chris Boylan about the chancellor’s comments in the Budget and the perceived implication that many are cut off from advice.
Mr Boylan said many advisers “already offer the client an opportunity to fill a basic fact find and then we will offer a basic consultation for free and only start charging them when we have worked out what services they really want”.
Mr Webb said he is pleased that advisers offer a free at-retirement fact find and initial free consultation “which is entirely welcome”, but that it is like “wine tasting” with a wide variety of choice and with regulated advice being akin to a “fine wine”.
He said: “I see no contradiction between a guidance conversation, which is not regulated financial advice [and] gets people started, and regulated financial advice. I liken it to wine tasting. People will have a guidance guarantee and then come to you for a fine wine.”
Mr Boylan added that there is a “difference” between regulated advice and guidance “and the general public will not understand that necessarily and that is dangerous.”
Mr Webb replied that the guidance will get people started as it will familiarise the public “with that with which they are not familiar”, adding “there is a huge diversity with levels of financial literacy”.
He said: “People may not necessarily understand that by spreading their cash over a period of years they may pay less tax, they may not be familiar with the products, the notion of how long they will live.
“I think we have a job to do that by giving people these freedoms we equip them to start that journey.”
The adviser also highlighted what he described as an inaccuracy that no one has had to buy an annuity “for quite some time now” and “some of my clients” had been “quite insistent” on annuities since the Budget so “annuities aren’t dead”.
Mr Webb responded that the chancellor was “talking to a non-specialist audience” and clearly people have not had to buy an annuity, “but those people effectively had no option in a sense”.
He said: “So they do not have to buy an annuity but we are giving them serious alternatives - it’s like I am free to eat the Ritz but I don’t have to do it.”