I have long held the view that financial regulation is to blame for the near decimation of independent financial advice in this crumbling country of ours.
Think Retail Distribution Review 2012, and then think RDR again. And then think soaring professional indemnity insurance premiums.
Yes, standards across the advice market have risen as a result of RDR, but the professionals who stoically remain in business and are still able to meet their PI bills are now concentrating their efforts on those among us who are considered ‘affluent’.
The majority of the adult population have no access to independent financial advice.
I wonder how the regulator feels about this state of affairs given the sorry mess this country finds itself in.
The yawning – and unacceptable – advice gap left by the paring back of the financial advice profession has seldom been more evident than it is now.
Households, some financially savaged as a result of the economic fallout from the country’s battle against coronavirus, are screaming out for advice on how to rearrange their household financial furniture. And, sadly, it is not available.
Should they cancel their financial protection insurance?
Should they temporarily suspend the payments they make into a pension or Isa? Or should they take a cold and calculated look at their household expenditure and trim back where possible?
Many households just do not know what is the right course of action to take.
They feel isolated and scared and some are panicking as a result, making financial decisions that are not necessarily in their best, long-term interests. If only they had someone to hold their hand and offer them some sound advice. Damn you, RDR.
This point was drilled home to me a week or so ago when Hargreaves Lansdown produced some revealing analysis into what people have been doing with their pensions during the coronavirus. It did not make for particularly pleasant reading.
According to Hargreaves, one in four people have taken an axe to their pension contributions since coronavirus sent the country into near economic meltdown.
Some have reduced their payments (14 per cent) while others, worryingly, have stopped them altogether (11 per cent). Another eight per cent, says Hargreaves, are planning to trim or stop their contributions in the near future.
This culling of pension contributions is across the board – both men and women and people of all ages – although it is the younger adults among us (the under 35s) who have done the most paring back.
A result, says Hargreaves, of two factors: greater furloughing among young workers and a view among younger workers that pensions are a far-away consideration and so can be sacrificed. Understandable.
After all, pensions do not help pay pressing bills; only hard cash or credit does that.
The picture is probably more bleak than Hargreaves paints. This is because the survey does not include those who have recently lost their job as a result of the economic meltdown triggered by coronavirus.