Lorna Bourke's article (Money Marketing, November 22) makes some excellent points about the need to give people access to advice to help them make financial decisions which can have a very big effect on their lives.
The so-called 1 per cent world has been a factor, albeit not the only one, in the withdrawal of many of the natural sources of advice for low to medium earners, already becoming disenfranchised as a result of the steady decline of home-service business.
There is little doubt that this is a growing problem but whose problem is it? Clearly, the Government will be concerned that people should make proper provision for themselves but research by Swiss Re and others indicates clearly they are unlikely to do so without access to advice.
There is a danger that esoteric debate to determine who is responsible for helping people to make decisions gets in the way of finding solutions. Such debate is largely irrelevant as there is general acknowledgement that there is a problem to be addressed and energies would be well spent working on solutions.
Lorna Bourke talks about a voucher system to allow people to get a couple of hours of advice. This is but one of many good ideas which need to be brought together. Our own researches suggest there is a role for employers in encouraging their workers to self-provide, perhaps by being incentivised to make advice available in the workplace or through providing payroll deduction facilities.
There may be benefits for the employer, too, as employees appreciate the service provided for them but also begin to get a better appreciation of the value of any financial services products provided for them by their employer.
The regulatory framework can help, too. For many customers, advice needs are pretty basic and are a matter of identifying the key areas for action, encouraging them to do something and holding their hand throughout the process.
The excellent research work by Oliver Wyman and Company on behalf of the ABI suggests we should create a new form of representative, advising on a limited product range but able to meet the needs of many of those who are disenfranchised, since they would be subject to lower regulatory costs.
We have to accept that for many potential customers our products are pretty, boring. They may have a vague understanding that they need to do something but this is of limited use if they do not know how or are unable to find someone to give them advice.
Our research shows customers are least confident when making decisions on pension provision and protection plans such as life insurance, income protection and critical illness. Without sound advice, they just will not do it.
If the component parts of the industry can get together to address this and leave aside factional interests, a win-win-win opportunity awaits us:
A win for the Government as the potential burden on the state is relieved by better take-up from those able to selfprovide.
A win for providers and intermediaries as the opportunities to turn
potential business into actual business grow.
Most important, a win for consumers who become able to access affordable advice and products to meet their needs.
A pretty compelling opportunity. Oliver Wyman & Company estimates that there are some 11 million households which are now unprofitable for providers and intermediaries to serve. How long can their needs be ignored?
Swiss Re Life and Health