James Coney  

Take a mid-career MOT before it’s too late

James Coney

James Coney

I know there are many in the adviser community that do not like the Money Advice Service or Pension Wise.

I understand the argument that what they offer – in some cases – may double up as advice and cross the thin line between generic information and actual financial guidance.

But the evidence from the annual review of Pension Wise, compiled by Ipsos Mori, suggests that they are serving a useful purpose. If nothing else, it is an education tool to help investors make better decisions.

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It would have been helpful to know how many of its customers go on to seek independent advice. My suspicion is not many, because it is not as if those who turn to either the Money Advice Service or Pension Wise are likely to find an independent adviser who will serve their needs anyway.

After dropping that grenade, let me just say that the issue of how to provide advice for those with smaller pots is a conversation we can have another day.

The most striking findings were about the decisions savers made after just one appointment. For example, on the subject of taking cash in chunks from their pension, 74 per cent of those that used Pension Wise thought this was possible, compared with 37 per cent of non-users.

The split is similar for those who thought you could take more than one option for a pension pot. That strikes me as a substantial impact in consumer education.

The interesting discussion about what the Pension Wise findings show is around how we can all make consumers have these conversations about their savings earlier.

Those who contact Pension Wise are clearly making better decisions. It is not in the findings, but I would bet a significant number then went on to contact an adviser.

Many advisers who I speak to say it is not uncommon to find themselves suddenly picking up the phone to a man (for it is usually a man) who has hit about 53 to 55 years of age and counting down the years until retirement, and suddenly thought, ‘Oh damn’.

But as we all know, 55 is too late to steer this ocean liner away from the iceberg. Retirement is just too close.

What we really need to do is encourage a health check earlier in life. A mid-career MOT, if you will.

Aviva has been the first to pilot this, and plans to roll it out to staff who reach 45 from next year. But not all firms are quite so paternalistic with their staff. 

So how do advisers reach these savers? This is where the industry as a whole needs to sing in chorus. It would be a great opportunity for the bastions of long-term savings, the insurers and investment houses, to show a more consumer-friendly face.

All too often we talk about the need to start saving early, and generating income in retirement. But the discussions about making sure you are on course are non-existent.