Providers getting involved in client decisions over pensions, as mentioned by Steve Webb recently, sounds completely plausible to me.
I joined the industry back in 1991. If I remember correctly there were around 300,000 advisers in the industry at this time. We had ‘the man from the Pru’, Britannic, Pearl, Refuge, United Friendly and many more walking up and down the streets of Great Britain collecting savings (remember savings?) from clients, and becoming the trusted advisers for many families. The government of the day then said we were all under-qualified, overpaid salesmen.
So here we are 24 years later with something between 25,000 and 35,000 advisers, all with minimum level 4 qualifications, providers’ costs driven down from 5 per cent bid/offer spreads to 0.2- 0.9. No commission for advisers, only professional fees. We have a massive pensions ‘black hole’ so we now have auto-enrolment, and nobody saves any more because we have credit cards instead. We can then write off all this debt through IVAs or complain screaming “mis-sale” and no doubt get compensation paid as well.
So what next? Why do we not create the biggest need for advice potentially during someone’s lifetime, where the wrong decision could impact on the quality of that individual’s life forever, then impact on their spouses when they die and then impact further on any potential beneficiaries.
The government could then promise advice (no, sorry – ‘guidance’) at this vital point. They could then provide an ‘advice voucher’ which could be redeemed against the government’s pre-approved (FCA register), minimum level 4 qualified independent adviser. This would no doubt allow both adviser and potential client to discuss needs, and if further, more in-depth advice were needed, allow them to discuss fees/costs going forward.
On the other hand, the government could ignore this readily available and qualified group of advisers, and dumb down the advice process. Then direct those in need of advice to Mas or the Citizens Advice Bureau? Or why not turn to the existing product provider who has no vested interest in retaining client and funds? After all, look how well they embraced open market options! What could possibly go wrong?
Damian Lomax
IFA, Oracle Financial Management, Rotherham, South Yorkshire
