Pensions commentators have dismissed concerns that a push towards guidance could undermine advisers, saying the advice process can provide much better support for clients.
The regulator is looking to introduce a stronger nudge to guidance, which would see providers offer to book Pension Wise appointments for their clients looking to access defined contribution pensions.
Some have said the policy could undermine advice as providers are still expected to push guidance sessions even if the saver has seen an adviser.
Steven Cameron, pensions director at Aegon, said: “Financial advice provides a much deeper support for a customer than Pension Wise guidance, including a personal recommendation. So it’s particularly controversial for the FCA to be proposing even customers who have already taken financial advice on retirement options to still be nudged to Pension Wise.
“In many cases, the adviser may be supporting the customer in implementing their decision to access. While customers can opt out, requiring providers to nudge to Pension Wise in these situations could be seen by customers as the provider questioning the adviser’s recommendation.”
But others disagree.
Jessica List, pension technical manager at Curtis Banks, said there was only a risk of undermining advice if the impression was given that guidance offered the same service as an adviser but without the cost.
She said: “I’d like to think that if the nudges and guidance appointments are done right, it will encourage greater engagement with pensions and result in more people seeking advice.”
But she admitted that guidance was an easier service for providers to encourage take-up on.
List added: “I think when the push is coming from providers, people may be more likely to be receptive to the suggestion of using a free and impartial service, and possibly more wary about being encouraged to take advice.
“That said, I think it’s very important to promote the availability and benefits of both guidance and advice, in the right ways.”
Tom Selby, senior analyst at AJ Bell, agreed guidance was “not a substitute for advice” but said increasing the take-up of guidance was the “right aim”.
“If anything, boosting people’s knowledge of the various complex retirement issues that need to be considered should result in more people appreciating the value a financial adviser can provide,” Selby said.
Others have said the push to guidance would highlight how complicated pensions planning can be, which will show off the value of an adviser.
Andrew Tully, technical director at Canada Life, said: “For those that do consider the guidance I believe it will highlight how complex the position is.
"Guidance can only present the various options available and can’t consider the client's individual circumstances or say which option is best.
“This could push some people towards advice where the adviser will be able to help determine the best course of actions to suit their individual needs.
“Through all of this we shouldn’t lose sight of the end goal which is to encourage more people to seek regulated financial advice, although we need to acknowledge the challenge of advice capacity and how we address this.”
Issues with timing
Industry commentators however raised issues with the timing of the nudges, as in many cases they would be introduced after the saver has decided to access their pension.
Curtis Banks’ List said this could make the nudge easy to ignore or result in it being seen as “another hoop to jump through” when accessing one's cash.
She said: “The FCA’s own research has shown that nudges like these need to appear earlier in the decision-making process to be effective, so hopefully the final rules will be updated accordingly and the stronger nudges will have a better chance of increasing engagement with pensions and Pension Wise.”
Selby agreed, saying it would be better to remove the link to accessing a pension and instead book the appointment on the person’s behalf earlier on, for example within two months of someone reaching their 50th birthday.
Selby added: “There needs to be a much broader review of the best points in time to nudge savers towards Pension Wise.
"In all likelihood people will be receptive to guidance nudges at different times in their lives – including before and after they have started taking a retirement income.
"There should also be a consideration of the role played by providers and non-commercial organisations in providing retirement guidance.”
amy.austin@ft.com
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