An insight from Steve Butler during National Inclusion Week
The latest update from the Financial Conduct Authority informs us that it will be taking a “holistic” look into the boundary between guidance and advice, something I very much welcome during National Inclusion Week. I’ll explain why.
For those who may not yet know what I’m heading towards, this is one of the barriers to helping as many people as possible access financial services with more informed understanding.
Basically, the dividing line between regulated advice, which only a minority can afford or want to pay for and guidance, which is not bound by the same rules, has been made less visible.
One of the unintended consequences has been to spook financial advisors into strictly demarcating what they will and will not advise their clients on.
This is partly down to being on the hook for any mistakes made but also a sensible approach to risk. If it looks particularly, ferociously complicated and doesn’t pay the fees to reflect the risk taken, it’s unlikely to be advised on.
So when you compare this market to that for guidance for financial products and services, where there is very little or no regulatory responsibility on participants, a pretty big gap has opened up.
The industry calls it The Advice Gap and many within our sector are trying to devise ways to serve customers and the public with the kind of support they want to give in a manner which (a) is really helpful and (b) won’t backfire on them. Surely, that has to be better than saying: you’re on your own?
For us, this is a critical inspiration behind our online guided services. Employers can host our award-winning Aspire to Retire, a very modestly priced online solution to inform the questions their employees approaching retirement will have for them.
And once they have a clearer idea, they can find out how their aspirations chime with what their pension will provide. Pension Potential is a free-to-use service to help them make the most of their savings pot. Again, we work with companies who offer it to staff to help them make financial decisions.
In short, we strive to help people understand what can be tricky to grasp and we know from feedback that they appreciate this kind of guidance.
We do also offer Chartered financial planning, which falls under the advice umbrella, across the UK so it’s the best of both worlds. Paid, tailored financial planning and online, in-touch guidance to serve all our clients across markets.
We’re also involved with the Money Charity, where I’m a trustee, and the Diversity Project, part of wanting to share our expertise and experience beyond our commercial activities.
The upcoming review is to be supported and I wish the FCA every success in unpacking some of its issues but you will see around you from both us and other savings and retirement specialists, that we’re already trying to square this particular circle to include as many as possible.