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 firstname.lastname@example.org