Wealth head at consultancy Altus Simon Bussy is a recognised authority on advice technology. Ahead of a great debate on robo-advice at the upcoming Money Marketing Interactive conference, he gives his thoughts on why the lifetime allowance should be scrapped and why 5G will change the face of planning.
What is the most encouraging advice market trend you are seeing at the moment?
The increasing use of technology to support adviser practices, making them more efficient, professional, profitable, and allowing them to re-engage with some of those who were cast adrift from receiving advice post-RDR.
In parallel, and still in the early stages, the rapid development of algorithms to provide financial advice – not just investment advice – is extremely encouraging. Some organisations are pushing really hard in this space, and will reap the rewards in the future, particularly as open banking solutions, combined with other aggregated assets and debts, become prevalent.
The pivotal point from a technology perspective will be the arrival of 5G, which will transform how we communicate and interact with customers.
What one word or phrase do you think sums up the state of the financial planning profession today?
For the few, not the many
What key reforms would help get people saving more?
I’m sure this will be controversial to many, but at this moment in time I’d argue that we need to save people from themselves. In other words, if people don’t have the will or the discipline to save money themselves, then ‘means tested’ compulsory saving should be introduced. Let’s face it – successive governments, product providers, the best brains in the industry have failed – consistently – to address the problem. Lip service at best. Sometimes ‘tough love’ is the right answer.
The argument of course is whether this would be political suicide. So is the real debate what is ‘right’ vs what works to stay in power?
A more general point, and considering those who already have the discipline to save:
- Scrap the ridiculous number and variations of Isa and take it back to something far simpler which people understand.
- Scrap the lifetime allowance, and manage ‘pot size’ via contribution limits. Why do we insist on penalising those with the right behaviours, who demonstrate long term thinking, and who have no intention on being a burden on the state in the future?
What do we need to do to improve financial literacy in the UK?
Education, education, education! That’s often a divisive subject – some commentators will point to research which argues that financial education has little or no impact on future financial literacy and willingness to save. I’d absolutely argue the alternative viewpoint; we must educate the next generation in the basics of financial literacy – it’s a skill, a framework that will provide benefit throughout life.
The ability to manage money, understand the impact of compounding on savings, and the sometimes devastating impact of debt, not only helps individuals and families achieve their dreams, but also helps improve people’s mental state and well-being, and reduce stress, ill health and argument.
Importantly, to make this a success, we need the right people in schools and colleges teaching this, engaging with students, making money management a compelling and attractive choice. The right teacher training – or outside experts, such as advisers going into schools, giving back a little – is critical.
Let’s start with the basics: account for core expenditure and debt payments first, then save and protect, and only after that think about discretionary spending. If we could drill that message, those behaviours, into every school child from an early age just think what a difference that would make. For adults – let’s recognise that cash and cheques – for many – have already been pretty much consigned to the history books. Managing money – both day to day and longer term – is often via a smartphone, so financial literacy and education also needs to get more attention by being – quite literally – in consumers’ hands (their phones) where they spend an ever-increasing amount of time.
If you could make a magic wand, what one thing would you change about how the advice profession operates in the UK?
Different tiers of advice – and this could include an ‘at cost’ government service – so that advice becomes accessible to the masses once again.
Yes, it’s very easy to find reasons ‘why not’, and ‘what if’, and get precious about it, but all the while we argue and debate and don’t do anything tangible that makes a meaningful difference, we have literally millions of people who are struggling on their own, with no advice at all, heading for an extremely bleak future. It’s time for action, not endless and non-productive debate.
Why do you think it is important to attend Money Marketing Interactive?
Money Marketing Interactive brings together a diverse range of speakers, offering informed insights from around the world, who are prepared to debate and challenge – a refreshing change from many events.