Each month, we ask our industry to answer one big question!
Jayne Almond is CEO of Stonehaven
While I broadly welcome the proposals included in the Thoresen Review to provide free impartial financial advice, there are a number of practical issues which need to be resolved. In particular it is important that:
the guidance is high quality and takes into account a customer's complete financial circumstances;
the person giving guidance knows enough about the range of options available to be able to advise clients appropriately
the guidance is appropriate and kept up-to-date.
This raises questions about the quality of those involved. Who is going to take liability for the guidance provided and ensuring that the information is up to date?
To take a practical example from my industry: equity release for example used to be thought of as a product of last resort and used not to be recommended by many advisers. However, the product today is very different and now has many safeguards which make it a sensible option for many older homeowners to consider.
Bad advice or failure to reflect changes in product design could leave the "free impartial advice" service proposed in the Thoresen review open to serious challenge from both consumers and providers.
Nick Bladen is head of pensions & bonds marketing at Skandia
In Skandia's response to the retail distribution review, our view was made clear that distribution in the retail financial market should be polarised into just two categories - advice and no advice - to bring clarity to the market. It is essential that consumers understand whether or not they are receiving advice. Any attempt to blur the distinction must be avoided. Those providing advice should take responsibility for that advice and consumers are protected by the Financial Services Compensation Scheme (FSCS). The no advice channel should follow a prescriptive process, giving a structure to the market and ensuring consistency for the consumer.
With this in mind, the proposals outlined in the Thoresen Review to provide information, but not advice, could sit well with this model. At the same time the market for advice could, and should, continue to be available for those who wish to use it.
It is clear that financial capability in the UK is below where it should be, and so efforts to address this significant problem should be welcomed. Sadly though there is no quick fix. So even with the best intentions, the ultimate test will be in the implementation.
Peter Carter is head of product marketing at Met Life UK
There is undeniably a need for more financial advice and education in the UK. Viewed in that context the recommendation of the Thoresen review for a centralised Money Guidance service with specialists covering different product areas is to be welcomed.
The financial advice experience should be a holistic encounter for consumers in which they understand how the products they have bought match their investment goals, their attitudes to risk, and their tax situation. The relationship between IFAs and consumers should be long-term with advisers focusing on service to clients as much as on recommending and selling products to them.
Better informed consumers will ultimately be better placed to judge which products are best for them. Providers who are confident about their products have nothing to fear from that - and potentially a lot to gain.
Matthew Connell is government and industry affairs manager at Zurich
Advice is useless without trust. Research and experience show that people respond to financial help that comes from a trusted source that they feel is relevant to their needs and preferences.
So it is encouraging that the Thoresen review has stressed the need to deliver generic financial advice through third parties. This is already happening. For example, the FSA has been working with universities for some time to deliver advice to students. Similarly, organisations like Help the Aged already offer generic advice on budgeting, welfare benefits and financial services.
For generic advice to work, it will have to be delivered through a mosaic of different organisations, each focused on a different group.
There may need to be a single body behind this, which develops standards of advice and monitors delivery to ensure that advice is reaching the people who need it most. However, a single, monolithic delivery mechanism, such as a giant call centre, would cost huge amounts of money while turning consumers off.
As the report points out, a partnership approach can be difficult and time consuming to set up, but in the end delivery through third parties is the only way to a first rate service.
Andrew Gadd is head of research at The Lighthouse Group
My understanding is that the new service will be delivered in partnership with a range of organisations, such as the Citizens Advice Bureau, which already offers similar services. It will provide generic guidance only. Consumers who want help on specific products will need to pay for extra advice on top.
I support the education of individuals but I feel that this should be done in school rather than later in life and the money would be better spent there. Mr. Thoresen seems to argue that the problem with this is that there are already a large number of people in the UK who have already missed the boat as far as financial education is concerned and this is who the new service will primarily be aimed at.
Perhaps I am missing something here but if we concentrate on education in the schools then surely for those who are interested they could have access to the teachers or other professionals trained in this area as part of further education or evening class programmes - or am I just being too simplistic?
Simon O'Connor is head of product marketing at Lincoln Financial Group
The objectives sketched out by the Thoresen Review are not in question. However, some of the recommendations made in the latest report do not sit well with the goal of a retail financial services market where consumers are made capable and confident through gaining access to clear, simple and understandable information.
We believe that the majority of financial advisers already perform a valuable role in ensuring that consumers receive advice appropriate to their circumstances. However, in the advice model suggested by the Thoresen Review, the scope for a variety of different roles under the banner of 'financial adviser' could well lead to more confusion, rather than clarity, among consumers.
The evidence suggests that the intermediary market is already moving in the right direction, with many advisers taking higher level qualifications and adviser firms adapting their business models. In pursuing the goals of the Thoresen Review, we need to aim for a single advice role in the distribution process, with a clear demarcation between advisers and sellers.
Chris Read is chairman of Dunstan Thomas
Consumers aware of the need for guidance, already get it. Those who don't, end up at Citizens Advice.
While it is very laudable for the Thoresen Review to propose the cost to be shouldered equally by the Government and the financial services industry, my belief is the costs should be born solely by the government but at a much earlier stage. Money guidance should be taught more vigorously at school, covering budgeting, saving and borrowing, insurance and retirement planning. You can now get a GCSE in citizenship, so why not get one in looking after your money? By doing so, individuals will enter the work place with greater awareness and preparedness for life ahead. Jamie Oliver has done a great job in cajoling our children to eat better in schools, so why not teach children how to manage money properly as well?
Adrian Shandley is managing director at Premier Wealth Management
It really is quite incredulous that we, as an industry, should now be asked to pay to recreate something that existed before the substantial burden of compliance and regulatory fees was imposed on the industry. The Thoresen Review runs the risk of making the same fundamental mistakes as the stakeholder initiative before it. It is interesting that Thoresen states that "It is a service that people need but don't yet realise it. It is not a case of if we build they will (just) come." and this is exactly what happened with stakeholder.
What is lost on the government, the regulator and the numerous intellectual experts that are put in place is the fact that people do not "buy" financial services, and the people that this money guidance scheme is aimed at by definition have little interest in financial products until they are forced to make a decision.
Furthermore, any guidance given to a consumer has to be free of actual product advice, meaning that the consumer then has to go to a financial services company or an adviser to get advice on a specific product. There is, therefore, no guarantee that the guidance given will be followed through to the actual product purchase, because the adviser may well have a different view once the consumer goes to the second phase.
If, on the other hand, the money guidance scheme is built along the principals of sending people to discount brokers once guidance has been given, then this obviously begs the question of ongoing and future advice, where will it come from? Deep down I sincerely hope that the money guidance scheme works, I have repeatedly stated publicly that there is a large section of the public that is totally disenfranchised from financial advice, largely as a result of the actions of successive regulators. However, in reality I think that this initiative is likely to go the same way as many schemes before it, simply because it depends on the consumer to be interested enough to make the first move.
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