On the whole, most apply common sense to charges, so their clients can access their financial planning – and the required investment cost – effectively.
Most advisers will complain the current regulatory set-up piles costs on them and their clients too, and they have a fair point.
Yet in recent weeks, it is clear charges are also being used to discourage some potential clients and have been priced to insure firms against problems with the pension freedoms.
The key word is ‘potential’ and it is completely up to the advisers concerned whether they really want to welcome a whole raft of ‘freedom’-accessing clients with open arms.
At the same time, it is clear there is a great deal of confusion surrounding the freedoms, some legitimate, some stoked by tabloid-style reporting.
The issue of guaranteed annuities demonstrates one of those knotty problems, where people may seek advice but not be able to obtain it for what they may judge to be a fair price.
Five months ago, busting a guaranteed annuity rate to take the cash would not have been viewed as particularly financially prudent. Indeed, quite the opposite.
Many other issues surrounding insistent clients are clearly playing on advisers’ minds too, hence the price rises.
Yet it may not play well to the gallery.
Many issues about insistent clients are playing on advisers’ minds, hence the price risesIt could very easily be construed either as predatory pricing or simply an example of advisers turning their backs on a problem. It is not, but it could appear this way or even be deliberately misconstrued in the media.
However, there are many things advisers can do.
They can offer to direct these customers to other advisers – who may well accept the business – or they can at least ensure Pension Wise is clearly signposted when turning clients away.
They could always suggest Hargreaves Lansdown, but some advisers may baulk at sending clients to a firm that is stopping just short of giving a recommendation with its retirement advice service.
In addition, investment advisers should probably explain very carefully why their charges for accessing pension freedoms are so high.
Yet I am still concerned there is a big risk of the sector being condemned, whatever it does.
The answer, ultimately, may be for regulators and politicians to establish better rules of engagement around simplified advice, which would allow many more players – including advisers themselves – to offer such a service.
But for this to be adopted in a widespread way, it will require a compromise on liability from bodies such as the Financial Ombudsman Service.
I am not sure the clamour is loud enough yet to allow this to happen. But I suspect one day people will begin to understand that the advice gap is not just something made up by the adviser lobby to win concessions. It is the reality.
What worries me is that advisers may get blamed for making the gap yawn wider, whether that accusation is fair or not.
John Lappin writes on industry issues at www.themoneydebate.co.uk
