Advisers' questions more complex than ever
I was at a street party for the Queen’s birthday and someone asked me what I did, and when I said I worked in pensions the immediate response was – “so you are a financial adviser?”
I took a few minutes to tell him that I was not, and although I had been many years ago, I explained what I do now and that I work with advisers on a daily basis.
It was one of those moments when it could have been the end of the conversation or not; today it was a not – “why do you say it like that?” I asked him.
“Well you know what they are like”, he said, and I was just about to ask him what he meant when domesticity intervened (my wife sent me to get her a drink).
Later on I was thinking about this as it touched on a subject that has been on my mind for a few weeks (since doing some preparation for a debate on FAMR a fortnight ago).
In the debate we were considering the difference between ‘guidance’ and ‘advice’ and I was trying to put the question of an advice gap into the context of other industries where the product is ‘advice’.
Obviously, the two main comparators were the legal profession and the accountancy profession, and in a strange way financial advice and the planning that follows encompass some of the key issues of both of these disciplines – being able to navigate the maze that is pension law/tax law/other law, and the ability to convert aims and ambitions into numbers.
The other thing that had made me think about financial advice was the quality of discussion and questions at a couple of recent IFA pension sessions. Pensions might be complex in some of their detail but this is being reflected in my discussions with advisers, whose questions seem to be more complex than ever!
So, in these days of trying to define advice and guidance for FAMR, I cannot help but think that in some way we need to show how good financial advice can be, and that with the cost of buying such advice comes the satisfaction of a professional service that can be relied upon.
That opportunity could well be pension freedoms and it is interesting to see that as the experiences of the first year are assessed the consensus seems to be that for advised clients it really has added value to the retirement plans of many. The final proof of the pudding however might not be seen for a number of years because for me, the great unknown will be the management of longevity risk.
In summary, I do think we are at a key point for financial advice – the rules as they stand bring so many opportunities – but will FAMR be the final part of the jigsaw?