So in my last post I was critical of guidance. However, it’s important to note I’m more critical of how the general public might be guided, and how that is clearly regulated.
I don’t think the problem is guidance driving a 35 year old to start small regular savings into what might be sub optimal investment solutions. The difference made is likely to be small and if it makes starting easier I think that is on the whole more positive.
The challenge is when guidance starts to get into more complex issues, pension transfers, lump sum investments, genuine tax planning, anything 10 years from retirement, and drawdown. I think then guidance can start to do more harm than good.
So I wonder, could planners and providers get together and deliver a workable solution to the regulator. One that looked at client segments most likely to want to save, but find it hard to get the support. Agree what products and scenarios can be covered and what should be out of bounds. Part of that process could be passing leads to suitably qualified IFAs
I think its a great opportunity for providers/fund managers (most likely to offer guidance) to work with IFAs. It’s a bold move, but imagine if your biggest lead generator was your platform provider or a fund manager.
The risk is IFAs see this guided solution as competition. Clearly in some ways it is, but in truth they are in the main aimed at different clients and are totally different solutions.
Taking a leap, but HMV in my view didn’t fail because it didn’t have an Internet presence, it played a part, the real reason was it failed because it didn’t deliver an experience. If it worked with bands, artists, producers to use it’s store space to deliver great experiences in entertainment it would still be here. Instead, it had suicidal pricing with suicidal cost bases (thanks to Mr Mann and Mr Ferguson for that line). It had a different outlet to online, but didn’t add anything to the product it was selling.
That will be the real difference between guidance and planning – product selling v an experience your client values. As long as advisers keep adding to the experience, not selling the product, I really think the future is secure.
Providers will deliver on these solutions, some better than others, but it will happen. I can’t help thinking better to be inside the tent. If IFAs help shape the solution then they will be better for clients. It may even help promote saving and in turn financial planning.
Clearly lots to work through and think about, and how to avoid this becoming restricted offering, which many would rightly resist, but I think the type of savings gap we are seeing requires something different.
Will the market ever be mature enough to recognise these two solutions can not only co-exist, but actually work well in partnership?