Pensions  

How Money Management helped the advice industry modernise

How Money Management helped the advice industry modernise

I am very sad that this article is the last I will ever write for Money Management, as it ceases publication after 57 years of being at the forefront of personal finance reporting. 

I had the good fortune to edit the magazine for 25 years, having joined as a staff writer in 1978. I previously worked for three unit-linked life companies and a national firm of independent financial advisers, so I knew the operations and technical policy details of the very subjects about which MM was writing. I became editor in 1986, retiring on the 50th anniversary of the magazine in 2012.

It was the perfect time for a magazine like MM, because it was quite simply unique. Although there was another monthly personal finance publication in print at the time, the investment put into MM by the Financial Times gave it a huge advantage over the competition.

The early days

During the 1970s the UK was in turmoil, and there was precious little regulation governing the way that life insurance and pensions were sold. Charges were very high and in the main extremely well hidden, which meant a lot of people got very poor value for money. Almost all life and pension policies had commission built into the pricing model – whether purchased through a direct sales force, direct from the company, or a broker, and there was no way of avoiding it.

MM started to produce surveys of life and pension policy charges and results in the 1970s. At first they were rather basic and relied entirely on the goodwill of the insurance companies to supply us with figures. But in the 1980s I began to realise that some companies were manipulating figures. So I started to get tough with them.

One well-known life firm, for example, had been providing results for its with profits endowment policies with a maturity date of March 1 – its annual bonus declaration date – even though the survey date was February 1, so its figures were not actual results but projections. In a time of steeply rising bonuses, this put it squarely in the top 10. I challenged this as unfair on competitors and policyholders but the business refused to supply February 1 figures.

So the next time the annual survey was conducted I decided to backdate by one year all its results over the previous 10 years, because technically those were actual results available in February; suddenly the company was no longer top 10. It was furious and threatened all sorts of dire consequences, but I wouldn’t back down. The firm subsequently altered its bonus declaration date to February 1 and it was back in the top performers, although not so high up the rankings!

The next step was to guarantee our surveys would include every company whose policies could be bought by the public, no matter what the source. If companies refused to provide projections of future values, I simply hired an actuary to work them out, with a suitable footnote! Usually, these companies didn’t want to take part in surveys because they knew they would compare badly, and this turned out always to be the case. Guaranteeing 100 per cent participation proved to be revolutionary, as MM figures started to appear in advertisements as well.