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CII and Age UK call for fixed price ‘focused advice’

A new report from Age UK and the Chartered Insurance Institute has called for advisers to consider using “focused advice” to address the mass market advice gap.

Citing a recent study by the Personal Finance Society, the report says 35 per cent of people would be more likely to use a financial adviser as a result of the retail distribution review, while 66 per cent of the population do not access any regulated financial advice.

To help address this gap, the CII says advisers should consider offering “focused advice” on specific topic areas like retirement and decumulation for a fixed fee or charged at an hourly rate. This involves a basic fact find and the production of an guide to a client’s options, but not advice on what the client should do.

Chartered Insurance Institute chief executive Dr Alexander Scott says Chancellor George Osborne’s “guidance guarantee”, currently being put together by the Treasury and the FCA, must provide the “right balance of information and direction” so people can make sense of their options.

He adds: “Equally as important is whether regulated advice itself can be made simpler, by introducing focused advice solutions that give people more certainty on specific issues and costs involved.

“The stereotype of older people as savers and careful money managers has an element of truth but knowledge gaps may prevent them from making the best choices.”

The PFS report, published in February, surveyed 2,000 consumers. Of the 66 per cent of people who did not access financial advice in 2013, 38 per cent said they did not have the money to invest while 16 per cent said they could not afford a financial adviser.

Almost a quarter said they would rather make financial decisions themselves based on information from websites and newspapers.

Among those over 80, around one third of people would turn to friends and family for advice first while just 6 per cent use a financial adviser.

The Government has committed to providing “free, impartial face-to-face” guidance for everyone from April 2015. The report says a “portable fact find” containing details of an individuals savings, assets, pension pots and debts should be introduced as part of this reform.

It says: “With permission from the consumer this portable fact find could be shared with anyone giving the financial advice or guidance at any stage in their lives and could be updated as and when circumstance change.”

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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. No doubt the CII will be dropping their membership fees and charges to advisers for all the study materials to ensure that we can pass on these savings.

  2. It’s clear that:
    – The clients want this.
    – The government, FCA etc want this (they have a guidance guarantee to deliver).
    – We (the advisers) want to be able to deliver this service with confidence.

    But, we keep coming back to the elephant in the room – the FOS – which does not recognize the concept of focused advice. And until they do, only the foolhardy or those spending other peoples money will attempt this.

    I look forward to the up coming paper from the FCA on this topic. Will they have the guts to tackle the FOS or will they just tell us we are all wrong to be scared and should just get on with it?

  3. Bring it on !! 26th June 2014 at 9:54 am

    I’m all for a fixed price focused work, but I thought the Government wants this to be free at the point of delivery. A price indicates we get paid.

  4. Douglas Baillie 26th June 2014 at 10:14 am

    Focussed advice that avoids the client completing a fully detailed and all inclusive fact find would be popular, and less expensive for thr client.
    The current problem is trying to deliver ‘suitable advice’ in an FCA compliant manner.
    I have many clients who simply want my guidance and/or my advice that is limited to their pension options, and what to do with multiple pension plans accummulated over many years.
    Such clients have a strong aversion to completing in-depth fact finds, and do not want to go to the time and trouble of digging out other financial information about other assets and liabilities.
    Such clients simply do not see the relevance of such tme consuming activity, and they certainly do not want to apy for my time to go through it with them. Nor do thay want to pay for me to draft and deliver a holistic, full-blown advice report.
    We need to get past this ‘barrier to advice’, and I hope that the FCA will consider new rules that will permit limited or focussed advice.

  5. I absolutely agree with Mr Page – the FOS is the big stumbling block here.

    Having had recent dealings with FOS, it is clear that a) their knowledge base is very poor, and b) they come from the starting position of the client is right rather than being neutral.

  6. Focussed advice that isn’t advice??? erm, would that be guidance?

    IMHO there needs to be a consistant message along the lines of, ‘guidance is generic’ and ‘advice is personal’. One can be mass produced (and priced accordingly), the latter can’t generally be mass produced without it ceasing to be advice.

  7. Mmm.

    “This involves a basic fact find and the production of a guide to a client’s options, but not advice on what the client should do”.

    Providing the “right balance of information and direction so people can make sense of their options”.

    So in other words, not actually providing regulated advice.

  8. Douglas Baillie is spot on – Clients would often say they liked dealing with me because I just focused on their pensions without trying to get involved with other areas of their finances.

    Good advice needs to consider all the relevant facts and information in relation to the advice being given so I see no reason why it cannot be focused on retirement income matters.

    Also clients are suspicious of hourly charging so fixed cost are a good idea.

  9. If it is that focused, then surely you’d only need a level 3 and not a level 4 or 6 Especially as it wouldn’t actually be ADVICE. So why would a level 4 or 6 want to do it and why would a client want to PAY for the level 4 or 6 when they can pay a level 3 to do it? Oh I forgot, level 3s cant do itanymore ao shed loads took early retirement and those who stayed and became lvl 4 lr 6 can demand higher pay now. Well done F-pack and CII, you certainly listened to what most of us told you…. NOT

  10. There is a school of thought that says the best qualified and experienced people should speak with clients so there is no compromise on the standards of advice.

    The push for focused or simplified is to make the process easier and more efficient – i.e. delivering good advice to middle Britain in a cost efficient way

  11. Most advisers already work at a fixed cost!?

    The costs are clearly stated and agreed at first meetings.

    As stated above the problem is the regulator and FOS, past judgments and inconsistencies.

    I have to say we seem to be going around in circles, all these bodies state what they want, we know and have stated what is need for it to happen. We need a legal long stop, rules not guidance from the regulator and the FOS that they stick to and do not change in retrospect.

    I am sure we will still be debating this when I retire, as the regulator, FOS and other parties will not give up their get out of jail, its was someone else s fault, as they misunderstood our guidance process. Guidance they have time and time again applied rulings in retrospect with the benefit of hindsight.

  12. It appears that Money Marketing – does not appreciate – like the unskilled at the FCA – that many advisers are set up to deal with a few clients – and to service them each year – to build wealth and reduce tax – not ” service the Mass Market “. If they want to service the mass market they should go to Tesco’s – where like their beef burgers – you do not know the content . Interestingly Sir Terry Leahey confirmed in an interview ” he did not know how much property Tesco owned “, which given he was the CEO ( which menas he was negligent or deliberately misleading his shareholders and the general public ) – and we now discover the Tesco Property Bank ( arranged through RBS etc., ? ) – and their property dealings – which are now ” being discovered “, by the new CEO with backing for the Chairman of Tesco. Like the ” Tesco Beef burger scandal “, The Board of Directors claim not to know what is going on in the company to which they have been appointed. We now find the same holds True of LloydsTSB and other banks . . .a result of their predator status. . . . . . The Food Standards Authority ( FSA ) do nothing The Financial Services Authority ( FSA ) did nothing . . .covering up scandal and corruption . . . . . Let the Buyer Beware. . . . .

  13. Who will provide ” Fixed Price ” or Focussed Advice ? Which Professional Indemnity insurance company would ” offer” Professional Indemnity for such a restricted service . . . .?

  14. The reductions in numbers of advisers – which is the ” Cause and the Effect “, of FSA/FCA decisions on RDR – means reduced numbers of advisers. The FCA can not now rely on the ” Mass Market ” being serviced. So having made great inroads into making the industry a ” Profession “, increased the costs ( in financial terms and administration terms ) . . .and the workloads , the Increased Exams with their huge costs – the FCA now wish advisers – to take their new ” Licences ” and CPD . . .and offer ” Fixed ” and Focussed Advice “. This is the result of ” unintended consequences “, and the restrictive practices of the FCA – who are abusing advisers Human Rights ! Which idiot came up with that one ? It is like a Government – refusing to offer education at university level – or making it so expensive – the Government has prevented students from obtaining Degrees. Those who do have to pay through the nose ( and their parents ) for a place at university . . . .which gives students a further debt which will not likely be paid back ( ever ) . . .restrict their opportunities . . .and for those who do make it – there are no jobs or very few jobs that even banks will not take the graduates ! Such is democracy under a conservative government ( and the few liberals who make up the numbers )

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