One
of the key areas that the Chancellor announced was the Government’s wish that
everybody should get impartial advice when retiring. As someone who has
now long worked in and argued for a professional, independent financial
planning sector, this was music to my ears. However, there is now a huge
gap in who is going to provide this advice, how it’s going to be provided and
what is going to be provided. Where should prospective retirees get advice
now?
I
have to declare a bias. I am the managing director of the country’s largest
independent fee based financial planners. I will obviously be saying that
clients should seek the advice from a fee based adviser. As a
professional, clients should seek the help of highly qualified individuals who
will for a defined and clear fee give them advice as to what to do next and
help them through the next steps. Obviously, professional advice provided
by people who have spent many years studying for qualifications and gaining
experience does cost money. Whilst many clients are only too happy to pay
for the value of the advice and peace of mind that they get, we need to be
clear that in certain circumstances the cost of independent advice becomes
marginal or even detrimental where clients have less money. What can
these people do? To an extent the sources of advice now have become
limited.
The
Government has launched and heavily marketed the Money Advice Service.
The MAS is to an extent a misnomer. Legally you can’t provide advice in
the UK on financial planning without being regulated by the Financial Conduct
Authority. The website gives useful information and but is essentially an
information portal. It tells you what you could do as opposed to what you
should do.
Many
of the high street banks have now stopped providing financial advice, and when
they do they will normally be restricted. This means that they can only
provide advice in certain areas and for them this will be limited to the
products that the bank provides. As most banks do not provide pension
provision or advice heading here may mean that the retirees get some cheap
advice but expect it to be limited. Individuals working in any regulated
business have to comply with FCA’s 11 principles of business conduct, which
includes dealing with clients with integrity and due skill and care.
Whilst many individuals in the banking world do and have always adhered to
these principles it is stating the obvious that up to now the culture in many
banks has led to mis-selling and a general lack of trust that these
institutions are now having to address.
There
are some online services but nothing that at the moment has got any traction
and this is still very much in its infancy.
Finally,
the insurance companies may well provide you with generic advice but this again
will either be limited or information.
As
you can see there are only a limited number of places that retirees can go
to. The advice gap does exist and so it will be interesting to see how
the Government intends to bridge this gap to provide advice to retirees in
2015.
Matthew
Phillips
Managing
Director
Telephone:
+44 (0)20 7893 3456
Email:
getintouch[@]broadstoneltd.co.uk
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