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Billy Burrows: The danger of throw away press comments


Over the last few weeks I have noticed a number of instances of respected commentators using what I call ‘throw away lines’ either on the radio or in the press.

Whilst these might have had dramatic impact when used, in the cold light of day they can be quite damaging.

I must confess to being guilty of this offence myself. I remember many years ago being quoted on the front page of the personal finance section of the Sunday Times saying “Insurance companies are screwing their clients”.

My immediate reaction when reading my own comments was who am I to say this because I didn’t really know what went on behind the closed doors at insurance companies.

That was before I joined Prudential. After a two year stint of corporate life I came away with the conclusion that those jolly clever actuaries do understand their numbers but there are so many variables in annuity pricing that a small change in one of the underlying assumptions can easily turn a profit into a loss.

The first comment that came to my attention was Adam Posen, a former member of the Bank of England’s monetary policy committee, when he said ‘it is tough luck’ that pensioners are faced with investing in annuities at such low interest rates during an excellent radio 4 programme; Quantitative Easing: Miracle Cure or Dangerous Addiction?

My view is that pensioners need much more than reminding they are unlucky to retire at a time when annuities are at an all-time low. They need urgent Government action to ensure they get better value when they convert their pension pots into income.

As an aside this programme is compulsory listening to anyone interested in understanding how the effects of QE will impact on the financial position of pensioners in the future. It is still available on the BBC iPlayer through this link. If you listen to this you might have seconds thoughts about recommending level annuities as the programme examines the link the between QE and inflation.

The other comment was by the well-known pension campaigner Ros Altmann who was quoted in The Telegraph saying “annuity salesmen – both at insurance companies and third-party brokers – had been given ’a licence to steal’”.

I think I would have described myself as an annuity broker when I was running my previous business but I certainly had no such licence. As my wife reminded me, if I had I didn’t go a very good job as there has been no sign of posh holidays in the sun or fast cars.

There is of course a serious side to this. It is easy to make headline grabbing comments but much harder to do anything about changing the world for the better.

Both Adam Posen and Ros Altmann have done a lot to help improve the financial well-being of the older generation, and Ros has often gone well past the call of duty in her campaigning efforts, so both should be excused for making a few un-guarded comments.

If we sweep away the hard luck stories and aggressive headlines we can see a lot of progress and good deeds.

For instance the good work in promoting the open market option and the increase in brokers and advisers who are helping their clients get a higher income by delving deeper into their medical history. Also let’s not forget those annuity consultants and advisers who are going the extra mile to ensure their clients are aware of all the relevant options.

Instead of talking about a ‘licence to steal’ which is something I don’t see in the market, let’s talk about a licence to make things better. Where better to start than with people who make the rules in the first place. As someone said to me recently, “It seems that regulation is getting in the way of common sense”.

Billy Burrows is director of the Retirement Academy and head of business development at Annuity Line


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Well said Billy.

    The press also have a responsibility to not mislead their readers which the Telegraph has clearly done. It makes no sense that an IFA has to go to the nth degree to ensure good and proper advice for each single individual. Yet the press seem to be able to give ‘advice’ implied at least to tens of thousands of readers! Now that is wrong.

  2. I agree with Steve Smith re certain parts of the Press. MM is one of the better parts 🙂

    @Billy – Good article Billy – Would you agree that if the Trivial pension limit was increased to 3% of the LTA or £45k whichever is the higher, that it would not be so much “tough luck” as Adam Posen was quoted as saying?

    Those with post of £45k would then actually have some realistic options to annuities because at the moment, the cost of advice for pots smaller than £35k surely outweighs the benefits of taking advice as to whether to opt for level, indexed, investment linked, drawdown and so on.

  3. It has long been a bug bear of advisers who have had to sit financial qualifications and are held accountable until the end of time for any advice that they give that the press can make sweeping statements to their readers and no one holds them to account.

    Some in the financial press have been able to get away with what is effectively advice to the masses without any recourse should it be incorrect (as an example wasn’t it Martin Lewis who said Icelandic banks were a great place to put your savings) while lambasting professional advisers as thieving scumbags who do nothing but steal clients hard earned cash.

  4. Nice to hear from the voice of reason, Billy!

    Industry commentators should be mindful of what they say. While these comments can often be justifed when taken in context, such attention-grabbing headlines are too good to miss from a journalist’s perspective.

    We must build consumer confidence and the impact of positive headlines cannot be underestimated.

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