One of the problems for anyone who reads newspaper reports is that you can never be sure if you are getting the whole story – even in a highly-respected paper such as Money Marketing.
After all, a paper is trying to encapsulate in perhaps 200 words what is often a complex set of issues and nuanced meanings.
What appears in that story is determined not only by the angle taken by the journalist but also how he or she quotes the various subjects who “drive” the report.
I have to say all this as a preamble, you understand, because if I didn’t, I would find myself astonished by the bizarre comments from Money Advice Service chairman Gerard Lemos, reported in Money Marketing last week.
Forgive me for returning to the subject of the MAS so soon after writing about it last month but the issue, as many IFAs are themselves telling me, is vitally important.
MM reporter Tom Selby wrote that Lemos told the ABI annual conference the target market the MAS is trying to reach is totally different to the one IFAs currently deal with.
Lemos was quoted as saying: “About half the UK population would benefit from free advice and that is the advice gap we are aiming to fill. It seems to me inconceivable that independent financial advisers can reach that market after the retail distribution review.”
It occurs to me that slightly more than half the UK population would actually “benefit from free advice” – like, say, all of it. After all, it hardly matters whether you are a millionaire or a dustman, you are hardly going to look at a gift horse in the mouth.
Yet it is not that kind of silly comment that gets to me, ridiculous as it is. It is the liberties Lemos takes with his interpretation of the statistics in terms of who IFAs and the MAS are attempting to reach.
The reality, and Lemos knows it, is that neither IFAs nor the MAS are able – or interested, for that matter – in educating and relating to a vast chunk of the UK population.
Who is being completely ignored? Millions of households of people earning barely above the minimum wage or on the dole, living in sink estates, whose incomes just about allow them to survive on a day-by-day basis, that’s who.
The MAS is patently uninterested in reaching out to them. If it were, it would have devoted vast areas of its website to debt counselling and the best ways to bear down on rip-off lenders. In fact, relative to the space it devotes to other issues, there is almost nothing regarding these issues on its website, clearly indicating its priorities are at the “higher” end of the UK population.
Take away from the remaining number the millions of pensioners who might have been relatively affluent and active savers once but are now simply trying to eke out a living on their small pensions and you are left with barely half a total UK population that both IFAs and the MAS could potentially target.
Allow for a huge overlap between many well-off consumers who end up believing the MAS gibberish about “free advice” and it is clear that IFAs will find themselves having to defend their work against people who believe the generic and sub-standard material they read on the MAS website is all they need to engage in intelligent financial planning.
You don’t believe me? For many years., I was involved in setting up a financial website, which we aimed at well-off consumers. Yet the language and approach we used led the boss of another highly successful website to visit my chief executive and, in his words, ask us to “get our tanks off his lawn”.
In other words, the market for web-based financial information is smaller and more heterogeneous than Lemos would have us believe.
Even if we accept that the overlap between IFAs and the MAS is nowhere near as great as I have suggested and their audiences are completely distinct, that begs another major question regarding the quality of the advice the MAS provides.
There is nothing there about how to base investment or pension decisions in a sensible manner other than a half-hearted look at charges. Nothing about risk and how to reduce it, about investing for the long term, about the differences between various asset classes and so on, all information that is vital if we want consumers to avoid some of the worst financial traps that millions have fallen into over the years.
In effect, what Lemos appears to be saying is that, assuming there is as much of a difference between his website’s efforts and the work of IFAs, which I dispute, then the MAS offers free advice to help those who would otherwise not be able to get any. If so, this so-called advice will be rubbish.
As I said, I have to believe Lemos was saying other far more intelligent things at the ABI conference than Money Marketing managed to fit into its 180-word report. Because if that were not the case, the MAS’s response to his critics really would be crass and pathetic.
Nic Cicutti can be contacted at firstname.lastname@example.org