Mind the Gap

Something got muddled in submissions, so here is my first post relating to guided advice.

So 43 million customers will be stuck in a gap – it didn’t take long for the first scary numbers to be popped out.  In truth Fidelity is right.  I probably struggle with the numbers, but the premise is right.  A bunch of people won’t get support to save for their future.

Something is needed, and something different, but I worry about guidance in its current forms.  Will people understand the difference between advice and guidance?

Some will say does it matter, as long as we engage more people in saving then that is great.  On the face of it that’s true, but I reckon most of these helpful guides will guide right to in house fund solutions.  The argument will be, that’s still better than no saving at all.  And on some level that is true.  Unfortunately IFAs won’t be able to use that defence.

The issue is the regulator hasn’t been clear here.  Lots of focus on detail about how to disclose, RAMR reports, lots more client paperwork, inspiring client responses such as “whatever”.  Not enough time focused on these strategic issues.  There will be a quick imbalance of IFAs  v these guided advice solutions if this issue isn’t addressed head on.

Simplified advice has failed on a face to face level,  has largely ignored this automated route to selling financial products?  Will it allow companies to invest in this without being clear, and then we see the next mis-selling issues, and more damage to savings.

Fidelity will not be alone in this, and whilst the research is clearly skewed to a desired outcome (most publicly available research is) it is still true, a gap will emerge.  IFAs can’t or wont serve lower value clients, and without intervention the savings gap will get worse.  The problem is everyone thinks guidance is advice, a fact not helped by the Money advice service giving us guidance all the time, but don’t worry its not advice!!

So which professional body will tackle this on behalf of the profession?  How will the playing field be levelled, and importantly how do we ensure clients get good outcomes.

My next post starts to cover this, and how I think both IFAs and guided advice can work together.

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4 thoughts on “Mind the Gap

  • Is one of the problems with suspicion the word ‘direct’ or D2C? If the distinction was made between advice and non-advised services, maybe it would be less contentious?

    Reply
  • I agree Phil. Much is in language. It’s also about how the regulator views it though. Much of the guidance tools start to look like automated advice, but without the regulation. (At the moment)

    However, I think working together might remove contention. Understanding that much of d2c or guided is directed at different clients and providers sharing plans more openly would help. In essence finding a forum for debate would be a good starting place.

    Reply
  • Is one of the problems with suspicion the word ‘direct’ or D2C? If the distinction was made between advice and non-advised services, maybe it would be less contentious?

    Reply
  • I agree Phil. Much is in language. It’s also about how the regulator views it though. Much of the guidance tools start to look like automated advice, but without the regulation. (At the moment)

    However, I think working together might remove contention. Understanding that much of d2c or guided is directed at different clients and providers sharing plans more openly would help. In essence finding a forum for debate would be a good starting place.

    Reply

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