It’s dead easy to get irritated when a journalist paints a word picture that attacks your profession, doubly hard to take when the visual alongside the article makes it a harsher attack.
Patrick Hoskins, in The Times yesterday, has managed to really wind me up.
His article looks at the challenges with which consumers are faced in light of the changes introduced to pensions in the recent Budget.
Patrick does a really good job of describing how important it is for pension plan owners to make the right decisions at retirement.
He eloquently describes the challenges and that those at retirement face, not least working out how to make their pension fund last the whole of their life, particularly because the proposed changes will allow total access to the pension fund.
He identifies just how difficult planning can be, not just at age 65 but at much younger ages as well.
The complexity associated with these decisions cries out for impartial, independent advice but the use of pejorative words throughout his piece will do nothing to encourage the consumer to seek such advice.
We are told that “Independent financial advisers could play a role, but inevitably they will see their clients as milch cows and they are expensive.”
Independent advice is “expensive” for two reasons.
First, it is expensive to provide. With the average cost of annuity advice shown as £680 it would take 22 clients at that level just to pay our firm’s Professional Indemnity Insurance.
Another 40 plus would be needed to pay the levels to the Financial Services Compensation Scheme.
A dozen or so clients would need to pay us that fee to pay our FCA/FOS and MAS fees. Need I continue?
The classic error is to mix up the fee we charge clients for independent advice with profit; the two are indeed very different things.
It is also expensive because it is valuable. Competent advisers stop people from making expensive mistakes.
And yet apparently independent financial advisers are not “sufficiently house trained.”
Patrick refers to last weeks thematic review output from the FCA which claims that “more than half of advisers are still not fully disclosing their fees to clients.”
He suggests that organisations such as the Money Advice Service might deliver the guidance service (MAS is paid for by advisers by the way and not as erroneously claimed from time to time by Government) but they are simply unable to provide advice (they provide guidance despite the title of the organisation).
Yes, perhaps the Pensions Advisory Service could have a role to play as might Citizens Advice but all of these would require greater resources.
And let’s hope no one is disingenuous enough to suggest that advisers fund this – one of the reasons independent advice is so expensive is a function of a high cost regulatory system.
I agree with him though that product providers are absolutely the wrong party to run the proposed free guidance service. They have a substantial vested interest.
Patrick finishes his article with a call to avoid the sowing of seeds for another mis-selling scandal. And the sting in the tail is literally a sting in the tail.
The visual that accompanies this article is of a swarm of wasps around a pensions honey pot, each wasp carrying a briefcase with the label FA (Financial Adviser)
I will be the first to admit that the recent regulatory changes, called the Retail Distribution Review, have yet to sort out all of the bad behaviour of the past but it is by no means as bleak as some would believe.
Damning all IFAs with articles like this is as silly as suggesting that all Journalists hack phones. Of course they don’t.
Perhaps what we we need is some fact based articles about the modern IFA with a client centric and transparently charged proposition and service.
Don’t hold your breath though – good news doesn’t sell newspapers.
