View more on these topics

&#39Advice essential to close savings gap&#39

Financial advice is essential if the £27bn savings gap between what people need to save and what they are currently saving is to be closed, says a report from the ABI and consultants Oliver Wyman and Company.

The report, called The Fut-ure Regulation of UK Savings and Investment, issued this week, says advice is necessary to encourage saving, especially among low to middle earners. It found that 46 per cent of households surveyed in the £9,500 to £13,500 income band say they would not have saved or invested had it not been for the advice they received.

The report says the costs of dealing with compliance make it prohibitively expensive for the industry to offer advice to low and middle earners. It says there are two key roles played by advisers – encouraging lower earners to save and optimising savings for higher earners.

The report calls for a new type of adviser, called a financial awareness representative, to primarily aid moderate earners. It says that, with reduced compliance and training burdens, there could be up to 6,400 FARs by 2005, which could result in 1.1 million new savers and £6bn more in savings.

Other changes identified in the report are lifting the price cap on stakeholder and Catmarked products to 1.5 per cent, making employers pay for advice for their staff with an annual financial healthcheck and compelling employers or emp-loyees to contribute to pensions.

ABI spokesman Malcolm Tarling says: “Independent advice has an important role to play in closing the savings gap. We don&#39t want to see it become more difficult to access bec-ause those who need it most won&#39t be able to get it.”

Aifa director general Paul Smee says: “It is an interesting idea. It needs more working out and I would be happy to join them to work it out. This is not a market model which excludes IFAs.”

Recommended

ScotEq extends range

Scottish Equitable Protect is adding income and unemployment products to its protection range to extend the scope of its menu-based protection suite.The income product, which ScotEq says has been designed specifically with IFAs in mind, is available through its mortgage, personal and business menus, while its unemployment cover can only be accessed through the mortgage […]

Exams aim to raise standards in call centres

The Institute of Financial Services is offering a set of exams for staff in financial services contact centres.The Contact Centre Professional qualification will ensure staff are trained in customer relations as well as industry-specific topics.It consists of three modules – understanding the contact centre environment, understanding financial services from a customer perspective and personal development, […]

Outside edge

At the FSA&#39s open meeting on polarisation, it was argued that regulation focusing on making the existing market work is missing the point. The greatest gains, it was claimed, will be achieved by raising the level of retirement savings and this should be one of the primary objectives of regulation. This is plausible but is […]

Learn pension legalities

Practitioners wanting to polish up their knowledge of the legal framework of pensions can find out more at Practical Pensions: The Latest Legal Requirements, a conference in London next month.The conference will look at issues including the impact of the Equitable Life debacle and Myners report, pension sharing on divorce and stakeholder pensions versus group […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com