Following my article of 28 January, ‘Advisers must save people from themselves’, I was pleased to see some online comments respectfully disagreeing with some of the points I made.
It was an unusual reaction, you may think. However, I believe it is great to see advisers debating a topical issue which means a lot to them. All the more so, when the foundation of all of our stances is the same – how best to advise clients.
In this case, my view is that George Osborne should restrict pension freedoms for current members of final salary schemes at the next Budget or, at the very least, ensure it is available only at their normal retirement date. I also accept that there are a few exceptional cases where one could argue that cashing a final salary pension early may be in the client’s interest.
Of course, nobody wants to deprive a client of access to their own money and, equally, nobody wants to see a client take action which is to their financial detriment. As financial advisers, we have a duty of care which I believe includes protecting clients from themselves.
Until less than a year ago, access to pension funds was unavailable anyway; it is therefore not some fundamental right that has been around forever. I am also very concerned for those advisers with clients in final salary schemes who are advised on all the facts but who still make choices with potentially cataclysmic consequences for their financial future.
I believe it is inevitable that many of these clients will re-surface as complainants in years to come, claiming that they were either given inadequate information to understand the full impact of their actions or that, as a ‘vulnerable client’, they should not have been allowed to do what they did.
You do not need to be a genius to visualise what the ambulance chasers’ adverts will say as, once again, they try to put the blame on financial advisers.
It is also absolutely certain that the Government will wash its hands of responsibility for the debacle and leave financial advisers and the FSCS to pick up the potentially huge liabilities.
I appreciate we may never be in total agreement about the answer to this predicament; however, I heartily welcome the debate as I believe it shows that advisers are passionate about what they do and equally passionate about ensuring that their clients receive the highest quality of advice.
Ken Davy is chairman of The SimplyBiz Group