A better informed public more readily recognises the value of professional advice, is more willing to pay for it, more likely to take the advice and less likely to complain as they understood the advice in the first place. There are a few issues to address to ensure we end up with a thoroughbred and not a camel.
The objective is “that every person, including those on the lowest incomes, can get quick, easy and simple access to good quality financial advice”. It is pleasing to note that the Government regards access to good quality advice as a matter of priority. It goes as far as saying: “The Government believes that everyone in society has the right to get advice they can understand and trust on the financial options available to them, from getting out of debt through to choosing a home and saving for a pension.”
Aegon chief executive Otto Thoresen has been asked to spearhead a taskforce and report back by the end of the year. We should be pleased someone of Otto’s stature and IFA focus has been asked to head this group. I am sure he will wish to hear the views of the IFA profession on how we see the generic advice network shaping up.
A key issue is the difference between information and advice. Information is generic and can only go so far in communicating the salient points. Advice is personal to the individual concerned.
Failure to separate out the differences can lead to problems in the years ahead, as anyone with even limited experience of dealing with the ombudsman knows.
The Financial Services Skills Council developed a workable set of standards that set out the role, and limitations, of generic advice and these would be the ideal starting point. The comments so far have made generic advice sound a little like basic advice and even focused advice so clarity is essential.
The fact that the Government has mentioned that generic advisers will be able to discuss pension personal accounts makes for interesting reading. The regulatory position of this “advice” will be important to understand.
The broader questions remain. How are we to deal with a growing savings gap and an increasingly heavy debt burden? The generic advice network may offer information on these subjects but there is little point opening a shop that sells nothing consumers want.
The focus on financial education in schools is essential. Aifa has supported the “financial capability” programme since inception. We believe passionately about the importance of workplace advice and taking the financial message to consumers. Hence, our work with Citizens Advice and asking IFAs to give up some of their time to participate in a pro bono placement.
I started by saying that Aifa sees much merit in this latest announcement. All our experience suggests that those who have not received advice do not appreciate the difference it can make. The more consumers who make use of the new generic network, the more they will have their eyes opened to the value of advice.
Generic advice can only take people so far. Ultimately they will want to pose questions about their own circumstances. This is where the IFA profession comes into its own. The challenge is for IFAs to rally to the cause and support Aifa as we negotiate the future of the sector on behalf of members.
Chris Cummings is director general of Aifa.