James Coney 

Advice is reserved for those with money

James Coney

James Coney

In my formative years, I found many reasons to dump girlfriends. 

One I left because she did not know how to cross roads properly – which was exasperating as invariably we would end up on opposite sides.

Another could not stand any sport – any. I still don’t know how that is possible.

Another insisted I meet her mum after one date. I was 21, and that was just too much to handle.

They were all perfectly lovely and I wish them every happiness. It really was me, not them.

Anyway, in this catalogue of unfair dumpings (and there were more), I never ended a relationship with anyone because they were too poor. 

But that is what restricted advice company 1825, part of Standard Life, is essentially doing as it axes 750 clients after reviewing whether they were receiving value for money.

They have, in Standard Life’s own words, “simpler financial needs” and will be given “alternative options about their ongoing service” – which sounds like something I may have said to those unfortunate young ladies all those years ago.

This cuts to the heart of what is going on in advice-land at the moment.

I appreciate that IFAs leaving clients because they are not rich enough is nothing new. There’s no judgment when I say that.

Advisers are businesspeople and businesses need to make money if they are going to survive. 

Consumers have to face the fact that advice is not for all.

The red tape that has been forced on companies – often for good reason, sometimes not – has made giving advice to the less wealthy practically impossible.

We were warned this would be the direction of travel ever since the Retail Distribution Review. And this could well be where we end up with defined benefit transfers if contingent charging is banned – which it should be, because looked on from an external point of view it seems to have too detrimental an impact on decision-making. 

Neither should we have a return to the pre-RDR world, good though it was for advisers who did nothing for their trail commission, it was also highly damaging for consumers. 

But where does this leave us? Where can a middle income person go to get advice on pensions and investments?

How much damage is being done to individual savers because they do not have access to any kind of independent support, particularly when invariably getting advice leads to better outcomes than not?

It is possible that this is where Lloyds and Schroders think they can steal a march with their tie-up.

The cull of the poorer client has left a gulf there for bank customers, and with Lloydsyou have the biggest bank of them all. 

But I cannot see how even they will be able to come up with an affordable model, not without some kind of cross-subsidy.