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Money Advice Service paranoia

The other night, a few of us were sitting round a dinner table topping up our glasses with some excellent wine and discussing the vexed topic of people’s choice of careers.

Do we choose jobs that reflect our personalities or do we grow into them? For example, do some people choose to become nurses because deep down they are highly caring individuals?

Our dinner table did not arrive at a satisfactory conclusion. However, it has to be said that many times I find myself wondering if it is an essential requirement of IFAs that they must be paranoid.

Last week, when discussing the Government’s new Money Advice Service, I found myself looking at various IFA websites to see what the debate was all about.

The consensus seems to be that the MAS is a bad thing and that it will leech consumers away from actual advice towards a misnamed and inadequate service that could harm the IFA profession. Only a handful of comments suggested the service might do the opposite and make people realise what they really need is genuine financial advice.

It was in the context of those debates that I found myself looking at the MAS site to see what it offers to consumers who have a genuine need for financial advice – and whether it really is as dangerous to IFAs as some seem to believe.

My first reaction is that the site is like a curate’s egg. Some parts of it will be very useful to people who access it, other parts are next to useless and, in the context in which they are presented, potentially harmful.

Sections on budgeting, life stages guides and the parents’ guide to money, introduce concepts not everyone visiting the MAS will have come across before. There are also some good links to external websites, including debt counselling and benefits, intriguing calculators and decision trees.

All of the above can be of genuine help to consumers who need some unbiased information. It is the first step in a long process for many people who start by looking for help in one area and eventually find themselves with more complicated needs that can only be met with the help of an IFA.

So far so good. My real worry, however, is with the meatier sections of the site and the comparison services on offer. There are two inter-linked issues here, first is the product comparison itself and the second is the quality of information surrounding it.

For millions of web users brought up on a diet of financial comparison sites in the course of the past 10 years, the proposition is a simple one. I give you some basic information about myself and you tell me the product that will suit my needs.

The site does not do this. Mostly it lists products in terms of cost, regardless of whether they are potentially commoditisable where price is a key determinant or whether far greater care needs to be taken when making a choice.

Using this approach in the context of pensions or investment leads to an almost meaningless list of providers and products, where the merits of one over another are not explained.

In other words, as long as the charges levied on it are cheap as chips, a fund will appear at the tip of the table, never mind that its manager is a complete nutter who used all the money to fund a poker-playing trip to Las Vegas.

Just as bad is that, bar a fairly risible section on risk and some basic information on the difference between, say, investment trusts and other products, there is almost no serious guidance for consumers on what factors to take into account when making product buying decisions.

No doubt the MAS would stress it is not giving specific product advice and that people need to consult with an adviser before proceeding further. This is undoubtedly the case, as is the fact that – being a Government-funded service – the MAS is constrained in terms of what it can and cannot say.

Even so, the gaps in terms of giving people a better understanding of the issues are huge. Neither is there any idea of the progression I ref-erred to earlier – that consumers who need to know more should consult an adviser.

What we are left with is a site that provides a basic amount of information – highly inadequate in many areas – but does not tell punters just how limited it is or where to go elsewhere for help.

Far from fuelling IFA paranoia, my worry is that the MAS website will not help consumers really understand issues that affect them – which is an issue of far greater concern to most advisers.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk

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Comments

There are 17 comments at the moment, we would love to hear your opinion too.

  1. Fictional …

    Caller: “Hello, is that the Money Advice Service?”

    Reply: “Yes, good morning, how can we be of service?”

    Caller: “I am looking for some money advice”.

    Reply: “Sorry, sir, we cannot give you any advice, just information”.

    Dialler tone ….

    Caller: “Yes, is that the Money Advice Service”?

    Reply: “Yes, good afternoon, how can we be of service?”

    Caller: “I am thinking of taking out life assurance to cover my mortgage. Down the pub last night, one of my pals said I must use a trust so that the money goes to my wife. Can you advise me on which trust I should use – oh, and I live in Scotland.

    Reply: I am really sorry but we cannot give you any advice on that.”

    Dialler tone …

    Caller: “Hello, I am very very angry about the advice you gave me over my pension – put me through to someone who can arrange compensation!”

    Reply: We don’t give advice, we only give information, so if you have ended up with a problem, that’s your fault, not ours!”

    Dialler tone …

    Non- Fictional:

    Extract: “The ASA is the UK’s independent regulator of advertising across all media, including marketing on websites. We work to ensure ads are legal, decent, honest and truthful by applying the Advertising Codes.”

    Is it legal,decent, honest and truthful to name an information service as an advice service?

  2. Worryingly we had a cold call from someone who recognised that they needed advice having been to this site. Coming up to retirement the issues regarding for example where the tax free cash should or should not be taken needed serious consideration. However, it was a classic case of advice being needed but it may not have been cost effective for us to deliver it. (It would have been a gamble by the client as to whether the fee we would have charged would have been offset by the additional income we could have got him and we could not answer that without doing further work)

  3. “my worry is that the MAS website will not help consumers really understand issues that affect them – which is an issue of far greater concern to most advisers.”

    And the cost Nic, was a cost benefit analysis carried out?

    Don’t worry though, it will give advice one day, there is no doubt that is the plan.

  4. Martin Bamford 19th May 2011 at 9:59 am

    I have two (very minor) concerns about MAS. Firstly that using the word ‘advice’ in the name is potentially misleading. Secondly that it is being funded by a levy on regulated firms, rather than by the taxpayer.

    However, these really are minor concerns and the potential benefits of this service far outweigh any concerns IFAs might have.

    In reality, the target audience for MAS is not the target audience for IFAs, particularly IFAs post-2012. There are far bigger threats out there to the IFA sector, and I’m not talking about the RDR.

  5. Julian Stevens 19th May 2011 at 10:21 am

    The core problem seems to be calling what was the Money Guidance Service the Money Advice Service. Why? Whoever thought that’d be a good idea? From what I’ve seen of them, the MGS booklets are very good, but why call the service something that patently it isn’t, shouldn’t and cannot every be? Stupid.

  6. Does this mean that post 2012, someone can

    * open a shop calling themselves “money advisers”
    * NOT be authorised or regulated by the FSA
    * give guidance and information about products
    * refer them to a mate who is an RI
    * earn a referral fee for doing so?

    Nothing wrong with that is there?

  7. Neil F Liversidge 19th May 2011 at 1:57 pm

    Why worry? MAS is the financial equivalent of John Major’s Cones Hotline – well meaning but a useless waste of time and money that will help nobody. If the FSA wants to educate the public they’d do better educating them to understand that professional advice is worth paying for. yesterday I saw a client with a BTL who was unaware he was liable for tax on the rent. He came to me wanting advice on whether he should take his lump sum from an occupational scheme or commute it. there were a number of issues involved and none of it would have paid commission so I quoted him £550 for a full report and advice, figuring it would take me around 3 hours on top of the hour I had already spent in our meeting explaining the taxation treatment of property rentals and various other concepts. He was aghast at the idea of paying anything for such advice and asked “Can’t you just tell me for free and not put it in writing?” I politely declined the opportunity to work for nothing and off he went. I should have referred him to MAS obviously. In fact, I think I’ll drop him a line…

  8. I see that the comments against ‘MAS’ are from financial advisers who have a vested interest in referring all potential ‘investors’ to themselves to earn money. I believe that many people who do not have much ‘spare’ money to invest or spend on life cover etc need some information to help them to understand the basics for their own requirements. Hence the ‘MAS’ can be justified – but I agree it should be an information service. From the information given on the website, people should be able to work out whether their situation requires a financial adviser or not and hence good advisers should be able to get more ‘referral’ business.

  9. I agree with both Martin B and Neil L. Also, whilst the MAS callers are unlikely to be in my target market in the first place i am somewhat annoyed at the propagation of the word ‘advice’. When many advisers are still finding it difficult to position fees for advice (the absolute right thing) it does not help that some IFA funded outfit is then using the very same word in the context of giving away free information which is not really advice (The why call it that). How does the general public get the reall message when the messages are conflicting?

  10. Martin Bamford is quite right. The site is not aimed at typical IFA clients and a lot of the information on there is useful. Let’s face it, most people won’t seek advice full stop and certainly not on a fee basis, so this type of service is the future for middle and lower income groups. I don’t doubt it will be developed a great deal as time goes on and I also agree with Martin that there are far scarier things on the horizon for IFAs than MAS.

  11. I agree with Martin again too (shock horror).
    Mike Fenwick has made a every good point (as usual) What happens when someone complains to the ASA? Will all the MAS booklets have to be reprinted as MGS?
    If not, then as Harry said, a precedent is being set which someone else could start using. Words change over time, but MAS’s title is misleading and could do untold damage.
    It’s bad enough when there are Independant Advisory Firms out their doing “execution only” SIPPs and things like that, where the consumer has never heard of the investment going in their SIPP untiul they see and advert, visit the “non advising adviser” or respond to a direct mailing (which by defintion cannot be execution only, it is direct offer)
    Call a spade a spade please.
    Oh Martin, I’m intrigued what are these threats you see post 2013?

  12. They couldn’t have called is the Money Information Service as then then acronym would have been MISs 🙂

  13. Money Advice are using the phrase ‘unregulated advice’ – not guidance, not information, but advice. I know because they said so at an industry event last week. This caused several IFAs present to be concerned, and led to comments such as ‘I’ll start an unregulated IFA business then – no PI, no exams, no RDR – happy days!’. However, when they say ‘advice’ they do not mean personalised advice, nor advice that mentions specific products. It will be far more generic, along the lines of ‘you should consider doing something about your income in retirement, or you should consider how you might pay the mortgage if you cannot work’ and so on, which in theory should act as lead generation for banks and IFAs, rather than being a competitor. Whether or not, and how their staff can balance the line of such advice, however, without crossing the line may yet be the real challenge.

  14. I just beamed down from planet Zarf. It’s a place Ian Holloway mentioned in a press conference on Wednesday.

    Someone advised me to bet on Man Utd losing at home on Sunday so I thought I better check on what the meaning of advice was.

    So I looked up the word advice in one of your dictionaries. It is defined as “opinion offered as to future action”. That made sense.

    That Money Advice Service seems to be all about advice too.

    And then some people on this planet seem to have a problem with the word advice being used to mean, ermm, advice. What is that all about?

    It’s not like this on planet Zarf at all.

  15. Simonne Gnessen 21st May 2011 at 2:38 pm

    There will always be limitations on a service that, in the main is offering information via the web or through booklets. But it is a valuable service that most consumers can take advantage of.

    I work as a financial coach (having been an IFA in the past), also within the restrictions of being non-FSA regulated, and know from experience that there’s significant guidance & support that you can offer clients without giving product advice. Clients can make decisions based on information provided that the information is clear to them, accurate and addresses all the relevant pros, cons and consequences for them. And, of course, some advice isn’t off limits such as cashflow planning and money management.

    The main shortfall I can see is that we can’t assume that people behave in ways best serve them. In fact, often the opposite is true, especially of clients that don’t seek the services of IFAs. So we have to find a way to engage people who think there’s little point in saving or investing. And we have to identify ways to challenge people and behaviour change. I’d love to see the MAS find ways to achieve that.

  16. Simonne Gnessen 22nd May 2011 at 11:04 am

    There will always be limitations on a service that, in the main is offering information via the web or through booklets. But it is a valuable service that most consumers can take advantage of.

    I work as a financial coach (having been an IFA in the past), also within the restrictions of being non-FSA regulated, and know from experience that there’s significant guidance & support that you can offer clients without giving product advice. Clients can make decisions based on information provided that the information is clear to them, accurate and addresses all the relevant pros, cons and consequences for them. And, of course, some advice isn’t off limits such as cashflow planning and money management.

    The main shortfall I can see is that we can’t assume that people behave in ways best serve them. In fact, often the opposite is true, especially of clients that don’t seek the services of IFAs. So we have to find a way to engage people who think there’s little point in saving or investing. And we have to identify ways to challenge people and behaviour change. I’d love to see the MAS find ways to achieve that.

  17. MAS,

    Another TLA! (Three Letter acronym!) Just what this industry needs. Does MAS stand for Marks And Spencers? No, surely not, Marks And Spencers will be around considerably longer than this latest brainwave. Why oh why is this industry continually messed with by nincompoops?

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