View more on these topics

Alistair Cunningham: Advisers will stop fools rushing into decisions

Alistair Cunningham

That advisers are undervalued will come as no surprise to readers and this concerning trend is only likely to increase in the age of the dangerous fools.

The fool comes in many forms but all share a few common features: they over-simplify complex concepts, make reckless assumptions and devalue proper advice.

Robo-advisers are the first example of dangerous foolishness. I accept there can be great value in supporting conventional advice with automated solutions. However, most systems I have seen are simply modern versions of conventional decision-tree product pushing. Providers have something to sell and the robo guides towards a solution. Granted, some are more sophisticated than others, but none are advice.

In a post-truth world, facts become increasingly irrelevant. I have written in these pages before about how those who claim to be “expert” are conflicted with their human failings and their judgement may be flawed.

Two years into pension freedoms and, due to a clash of several complementary factors, the topic of final salary pension transfers is now regularly featured in the mainstream media.

Time and again the same “experts” are wheeled out, decrying the conventional wisdom that it is not in most people’s best interest to transfer from these schemes. Notably, these experts are usually not advisers, have never given advice and will not be affected by the inevitable fallout.

I recently attended a roadshow targeted at individuals with benefits in these schemes. A layperson would likely have come away from the event believing they had to cash in their pension to avoid losing out due to “high” transfer values.

It was stated individuals should seek advice but more prominence was in fact given to advisers standing in the way of liberating this money, or the fees we charge.

I am not saying the individuals thinking of cashing in their pensions are foolish, but the fools spurring them on should know better. The panel made gross generalisations and used invalid assumptions. One had based their assumption on inflation being 2 per cent; another on longevity to 85 and returns of up to 8 per cent.

You need advice

An adviser would be more balanced. Transfer values are not “high”, they should be fair value. A combination of low gilt yields, low anticipated returns and an expectation that inflation will be higher for longer has led to the increases.

But even if people go on to seek advice, they cannot un-remember the seeds sown by these dangerous fools. Social media perpetuates it further, with loud messages invariably given the most weight. When a Waspi supporter declared that life expectancy for a 65-year-old was eight years, they received 20 times the retweets of the actuary correcting them on such nonsense.

The media is guilty too, with articles accentuating the benefits of strategies that meet their preconceptions of their demographics but rarely highlight the disadvantages. Or they are overly negative, paying little attention to the benefits. They are competing for a shrinking audience and balance is hard to find.

There will always be a need for advice. Advisers are uniquely well placed to simplify the complex, save people from their human behavioural biases and avoid the risks of herd mentality.

On many occasions we will struggle to shout louder than the fools but that does not mean we should not try.

Alistair Cunningham is a chartered financial planner at Wingate Financial Planning

He will be joining us at Money Marketing Interactive as a speaker on May 18th 



Alistair Cunningham: Time to shake up adviser directories

We have built a business around making it easy for existing clients to refer our firm to others. That said, we still receive a reasonable level of enquiries from external sources. One aspect of this is online adviser directories. However, the return on our investment there has been dwindling over the years. I have devoted […]

Changes to early exit pension charges

In November last year, the FCA announced that from 31 March 2017, early exit pension charges will be capped at 1% for those customers who are eligible to access their retirement savings from age of 55. The rules also state that for new personal pension plans started after that date, or on new increments into […]


Case study: administration — implementing a management log

Our client is a leading video game and publishing company best known for its console role-playing game franchises. The client provides a number of benefits, at varying levels and cost that attract a P11d liability. With the absence of a management log to track data for benefit movements, enormous administrative and therefore cost implications were occurring each year just to comply with P11d reporting requirements.


News and expert analysis straight to your inbox

Sign up


There are 3 comments at the moment, we would love to hear your opinion too.

  1. Assumed rates of this, that and the other can be used to paint any picture desired, either to conclude that transferring looks likely to be in the customer’s best interests or that it does not. The problems for the adviser begin when things don’t pan out as hoped/assumed, a complaint is raised based on the claim that the assumptions used were unrealistic and subjective assessment of the validity of such a claim is made by a third party such as an FOS adjudicator. It’s very, very dangerous territory.

  2. A very good article

    Just recently, I had a recommendation from and existing client, to have a chat with one of thier friends !

    Thier enquiry was more to do with investing rather than pensions, but they were interested in the vesting thier pensions in the short term (about 4/5 years time)
    Now they had spoken to 4 different “regulated” IFA’s including myself, they reported, inital conversations and charging was alike across the board, between the 4 of us, however the husband had a telephone conversation with an “adviser” (he was not able to establish if he was regulated or not or had an SPS) and his conversation was very different, fund recommendations were given, along with what to do with all his pensions etc etc etc

    So here we have a client circa £250k in cash over £200 in pensions 4 advisers recommending, a number of meetings, know your client, full risk and capacity profiling, aims and real objectives from the clients before any mention of product and funds…. then 1 seemed to know all of this in a telephone conversation and came out with full recomendation and funds ! apparently the costs were not that different either !

    The point is…… I do think a good many people (clients) will opt for the path of least resistance, and I cant tell you if the end result would be a good outcome or not (but we can all guess), but I do think regulation has set a dangerous precedent in making the advice process a burden and long winded, therefor there are some that will not bother and fast track straight to the finish line !

  3. Good article Alistair and I noted your twitter dialogue at the time and those involved.

    The issue is that there are significant ‘echo chambers’ across the board and as a result confirmation bias on an individuals views are easy for them to find – robo advice, model portfolios, client segmentation, fixed fees vs %ages, the fact that there is ‘overwhelming evidence in favour of passive funds’, DB transfers (or not to) and much broader general cynicism of others.

    I would propose that those least opinionated are likely to be the most considered in their views and therefore most likely to overlay client objectives with a suitable solution – the rest may well simply be looking to justify an already pre-ordained solution and doing so where their ‘echo chamber’ matches the clients.

Leave a comment


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