More pensions advice please!

I was a self-employed adviser between 1984 and 1995 and know what it’s like to build an advisory business, I made some mistakes, the worst of which was taking too short a view on my relationships with clients.

I hope that you’ll take these comments as constructive and forgive me if I come across as “lording it” but I do think I have a perspective you can learn from.


On my one week induction course (all that was needed pre-A-Day), I was told that I could help a client manage the financial impact of

  1. Dying too soon
  2. Having a long term illness
  3. Living too long.

These simple tenets of life insurance seem to have been put to one side.

Managing auto-enrolment compliance, salary sacrifice and flexible benefits are worthwhile corporate services but they are only the hors d’ouevre, what about the main course?

When I hear advisers say “we’re provider agnostic”, I begin to worry. If the choice of provider was important before RDR -what’s changed? If the answer’s “commission”, then there is a problem.

I was taught that helping people with the problem of “living too long” was about saving and not spending. I was taught to help people understand what they needed in later life and spend on tomorrow not today. My job was to help them invest their savings wisely and understand how to spend those savings sensibly.

But many IFAs I talk to today have all but given up on the financial education of ordinary working people. They’ve become “advice agnostic” and don’t give two hoots about take up rates ,voluntary contributions and the investment decisions of the workforce (unless of course they are wealthy enough to invest on the adviser’s platform).

Since the point of employers having employee benefit programmes is to help people manage later life, sickness and death, abdicating interest in the workplace pension and the financial welfare of the workforce is short-sighted – these advisers are cutting themselves off from the good work that should follow in 2015.

The New Annuity Framework (the Treasury’s phrase for what will go on after 2015), will deliver huge amounts into the investment markets. How and when this money is invested and spent is very much the business of advisers. IFAs are best placed to help ordinary workers with their life savings.

But already we see signs that IFAs may be excluded from the main event. Steve Webb has suggested that the Government intends for the default solutions for the average person “should not be retail”. Listen closely to what is being said to employers and by employers and they are sceptical of the value IFAs will bring at retirement.

The scepticism is easy to understand. The apathy to pensions and financial education now shown by advisers, coming so soon after the selling frenzy of 2012 confuses employers. Trust is being lost and it won’t come back overnight. There is plenty of competition for the “at retirement” wealth, not least from providers who are rolling out non-advised solutions week by week

IFAs need to be advising on more than the infrastructure of auto-enrolment. They need to be involved in advising employers and staff on savings and investment and they need to help employers establish or re-establish the right workplace pension.

Not to do so is short-sighted and will lead, as I found out 20 years ago, to missing opportunities later.



4 thoughts on “More pensions advice please!

  • Henry

    An interesting article, but I’m afraid I find the overall theme that IFAs are fools for ignoring workplace advice a little difficult to stomach.

    Many IFAs I speak to care deeply about financial education. Like me they feel terrible about abandoning anyone with less than £100k investable assets. But we really have little other choice. Compliance costs, PI costs, FSCS costs, advisers salary expectations now the commissions drug has been cut off, all mean we simply have no other choice but to focus on the mythical ‘high net worth’ individual.

    A move encouraged – if not forced – by the regulator and, therefore, by the Government.

    When it comes to the workplace, commission has been banned, the spotlight has been totally focussed on charges, and employers don’t want to pay fees for advice to their employees when they already have extra costs of paying into a new scheme to bear. The role of the IFA in providing advice to an employee has been surgically removed.

    Your implication is that the Govt are ignoring IFAs because we have chosen not to engage. I would suggest it is the other way round. The Govt have been trying to remove IFAs from the retail market for many years.

    The blunt message is that if you want advisers in the workplace, you have to find a way to pay for their time, and for the compliance and other costs that follow.

  • Hi Henry
    Nice to hear from you. But youve missed the point.
    Demand for advice exceeds supply. We’ve got plenty of “at retirement” work, and that leads into twenty or thirty years worth of “post retirement” work for each client we get.
    I might be a bit concerned about where my income was going to come from in 20 years, once the current group of clients has died. But I’m 48, so it’s not my problem. I dont consider that having a 20 year plan to generate earned income is short sighted.
    If society wants to make me interested in different groups of people, it needs to increase competition for advice, or reduce the demand for it. Increased competition will only come when we get equivalent rates of pay to other professions (accountants, etc) and/or the barriers to entry to reduce. Dont hold your breath. Reduced demand isnt going to happen – pensions are only complicated bit of an increasingly complicated financial planning scenario, which is the result of choice being continuously favoured over simplicity.
    If somebody told me that they were “provider agnostic”, I’d tell them to go to visit Standard Life’s offices. They do exist!

  • I really don’t understand why there is not a major stampede going on to serve this market.

    If you purport to be running a business and can see unlimited prospective clients then surely your job is to ascertain what these people want from our industry AND HOW MUCH THEY ARE PREPARED TO PAY FOR IT !

    Once you have this information all you need to do is to work out how to deliver what they want in a way which is profitable for you and of value to them.

    Seems utterly daft to define a new and exciting market by your existing preconceptions.

    Business is always about change and adapting to it and yes you will have to adopt different remuneration strategies but my goodness what a wonderful opportunity.

    Our business has made significant income and unearthed many substantial clients from a proposition delivered online to individual employees at just 1% pa. Our employers have gleefully embraced the improvement in employee perception of their benefit package

  • This is an area where I think actuarial consultancies like ours can collaborate with advisory firms.

    We are quite good at getting paid for technical advice but we don’t have the empathic skills that you guys have and in the longer term we have more to learn from you than the other way round.

    My point was that most advisers who we speak to are more interested in non-regulated work on middleware than using your hard-earned permissions.

    My apologies to any IFAs who I’ve accidentally dissed in my rather sweeping statement! Nonetheless, an opportunity is an opportunity and I’m really looking forward to 2015!


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