Advisers slam BoE economist’s ‘irresponsible’ comments

Bank-of-England-BoE-Building-Horse-700x450.jpgClaims made by the Bank of England’s chief economist that advisers do not understand pensions have been branded “extraordinary” and “irresponsible” by the industry.

Advisers say the comments damage the reputation of financial services and undermine efforts to boost consumers’ confidence in the sector.

Speaking at an event for think-tank New City Agenda in London last night, Andy Haldane confessed to not being able to make sense of pensions and that conversations with financial advisers had proved “they have no clue either”.

Haldane’s comments were made in the context of a need for better financial education in schools, such as teaching how maths can be applied to the real world, such as budgeting, understanding annual percentage rates on loans and deciding on the right savings, pensions and mortgages products.

He said: “To give a personal example, I consider myself moderately financially literate. Yet I confess to not being able to make the remotest sense of pensions. Conversations with countless experts and independent financial advisers have confirmed for me only one thing – that they have no clue either.

“That is a desperately poor basis for sound financial planning.”

Personal Finance Society chief executive Keith Richards says: “There is little doubt that professional advisers are in the minority of the population who fully understand the mechanics not only of pensions but the importance of financial planning in retirement.”

He adds: “For someone in his position it is a very irresponsible broad-sweeping statement that does nothing to boost public confidence and trust at a time when the government is trying to introduce reforms that start to bring back some confidence in the markets given the urgent needs for consumers to start engaging back into the savings culture.”

West Riding Personal Financial Solutions managing director Neil Liversidge has already written to Haldane offering him free pensions advice at his West Yorkshire business.

Liversidge writes: “If visiting Castleford risks being too much of a culture shock for you, however, I’m down in the City fairly regularly and can come to Threadneedle Street. Let me know. The first meeting is still at our expense.”

Advisers add pensions have become over-complicated because of decisions by policymakers.

Apfa director general Chris Hannant agrees: “By saying he does not understand it, which is probably not true, [Haldane] is trying to make a broader point that it is very complicated. The source of complication is the framework we have got.”

He adds: “There is a system to protect consumers – there is the Financial Services Market Act and the FCA authorises people and decides whether they are competent or not. He is basically saying the FCA doesn’t know what it is doing because it has let people loose to advise on these things which seems slightly extraordinary.”

Towry retirement planning head Andy James says Haldane must have been speaking to the wrong advisers to form his opinion the sector does not understand pensions.

He adds: “The industry as a whole is well-versed in pensions and while better education for all in the long term will assist, sensible financial advice is really the only option for those who lack the understanding and/or confidence in the current system.”

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. Martin Campbell 19th May 2016 at 2:51 pm

    Never have the words “Industry in denial” rung more true! Andy Haldane speaks total and clear sense, on a regular basis. My own experiences after 33 years in the industry confirm he is right, on this and much more. IFAs understand that bit of pensions they choose to do business in. That is very, very different from understanding the whole thing. Most recent example was asking a specialist Pensions IFA where P2P lending should fit in my portfolio. “Peter who?” was the most constructive response…

  2. As an economist, it would be helpful if Andrew Haldane could put a number on the “countless experts and independent financial advisers” he encountered and then then conclude whether this involved a representative sample, as distinct from a convenient reinforcement of existing prejudices.

  3. Daniel Daniel 19th May 2016 at 4:26 pm

    I suggest you change your IFA Mr Campbell!!

  4. Martin, what is the answer then? So far, we have been told that we don’t understand pensions, the BoE Chief Economist doesn’t understand pensions, MAS is not fit for purpose and no one can afford advice anyway. Are you suggesting that advisers should acknowledge their inability and bow out, or should they suggest to the client that they will advise on “that bit of pensions they choose to do business in”, then refer to another adviser for their “bit”, who will refer to another adviser etc, thus incurring multiple fees? Who understands “the whole thing” and how do we access these fonts of knowledge?

  5. Martin Campbell 19th May 2016 at 2:51 pm
    I have a hard time believing a specialist IFA wouldn’t know about P2P Lending. What he might not like is how he would utilise this into someone’s pension portfolio not just yours when there are a thousand different options instead. When you lend your money your capital is at risk and is not protected by FSCS and that would have a lot of IFA’s running in the other direction perhaps?

  6. I, too, have offered to meet Andy to see if I can change his mind.
    We’ll see!

  7. We’re all doomed if the Bank of England Chief Economist is only ‘moderately financially literate’

  8. What a numpty! He needs to spend a little more time going back through his text books! He may not “understand sums”, but he should perhaps know that he will never get his OBE talking uninformed twaddle. If the subject is so far over his head, bearing in mind his admitted limited financial nouse, he is obviously under qualified for the job he holds.Those of us who were well aware of the banking crisis both before and while it was happening could accuse all BoE staff of not understanding banking controls and fiddling while Rome burned. Bput that would a sweeping generalisation about an upstanding and sound body of people. The fact that one of them has abused his lucrative alternative to work should lead them to review their recruitment process I think.

  9. It’s ok, can’t understadn basic maths of pensions but can endorse Treasury projections of the carnage (play on Carney methinks!) from a Brexit Vote for 2030. Hmmm

  10. DAVID MORRISON 20th May 2016 at 4:17 am

    Me thinks Martin C may have a hidden agenda

  11. Well he went to a very posh school and 2 universities.
    I am surprised he cant work pensions out as his degrees are in economics.
    Perhaps he is just taking the p… ?

  12. Perhaps Andy was being “ironic” in that highly intellectual way that only highly intellectual people can understand. Us mere mortals just get on with the business of genuinely understanding pensions and keeping up to date with their ever changing landscape. We then pass that understanding on to clients in the form of advice. Which they understand. Andy doesn’t seem to understand this.

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