Advisers should be less sensitive to the misuse of the word “advice” in the Government’s plans to provide free at-retirement guidance, according to Personal Finance Society chief executive Keith Richards.
Chancellor George Osborne set out new pension freedoms in the Budget, which will be backed by what he described as “free, impartial, face-to-face advice” for those at-retirement, which was later clarified as guidance rather than advice.
The Chancellor later dismissed concerns from advisers that the terminology is misleading for consumers, claiming he needs to “communicate in English”.
Speaking to Money Marketing at the annual PIMS conference on board the Aurora last week, Richards said: “Some advisers get really upset about the Chancellor’s reference to advice, when he actually meant guidance. But if we look at this from a public interest perspective, if you read something, it’s information. If you’re told something, it’s advice.
“And while we might get upset in the industry that advice means professional, regulated advice, actually to the public it doesn’t.”
He said the industry should start thinking “in a more consumer-centric way” and have “less sensitivity around terminology”. Richards said: “We have to help the public understand the difference between professional qualified advice and unqualified advice. When consumers realise an adviser is more
competently trained and regulated, and affords them protection, they can differentiate between that and
a non-advised service.”
Separately, Richards said the way to engage with consumers who have not sought financial advice in the past is to move to a fixed-fee charging structure which separates review and implementation charges.
He said: “We are already seeing the development of more fixed-fee charging structures and some firms are dividing their process into an initial review charge and an implementation charge.
“That makes advice more approachable and can empower the consumer to feel more confident about the process.”