“I started out in financial services because I got thrown out of Iceland. I was working illegally on a merchant navy boat and we were catching too many fish.
“The Icelandic government came in to work out what was going on, found out I didn’t have a work permit and I was sent home to London.”
As opening gambits go, you’ll have to go a long way to beat it. This is Henry Tapper: irreverent, eccentric, opinionated – a genuine ‘pensions personality’, if that isn’t drifting dangerously close to an oxymoron.
His journey from illegal fisherman to First Actuarial director began on Oxford Street, London, where he sold life insurance policies to passers-by at £25 a pop. He says: “I ended up working for what at the time was called a ‘financial adviser’, although what we did was walk up and down Oxford Street with a clipboard trying to get people to give us their names and telephone numbers.
“We would then go out to see them in West Ham or Luton or wherever they lived and try to sell them a £25 a month whole of life plan. You used to get paid about £100 a plan, so you had to sell three of these a week to make a living. It was incredibly hard working the streets in those days.”
Flogging insurance on a busy high street now seems an alien concept. The FSA has moved to drive up standards and the decision to ban commission on advised pensions and investment products through the RDR has redefined the role of the independent financial adviser.
But has this increased regulatory scrutiny improved the quality of advice people are given? Tapper, a former IFA, says not. “I do not think we have got better at advising people. In fact, in some ways we have gone backwards.
“Now we spend an awful lot of time filling out forms. A lot of advisers talk nostalgically about the time when they were actually able to give advice about people’s finances without having to jump through all of these hoops.
“But pension products are developing and I think we are moving to a world where we can get pension products to people a lot more cheaply than we ever have before. Ultimately, we need to find a way to get 1.2 million employers staged through automatic enrolment without them having to pay a fortune in fees.”
The focus on how to provide auto-enrolment advice and information to small and medium-sized employers has sharpened since pensions minister Steve Webb warned that the Government could ban consultancy charging.
Evidence from Nest, the pension scheme set up by the Government, suggests a significant proportion of SMEs plan to seek advice from an IFA ahead of their auto-enrolment staging date. However, concerns remain over the willingness of these businesses to pay for advice up front.
Tapper says advisers can overcome this problem by focusing on providing advice to employers rather than their employees. He also believes fears about the unwillingness of small firms to pay for this advice are misplaced.
“If you were to take out a lease on a small property, you would go to a solicitor to make sure you understand what it is you are purchasing and you would pay a fee of around £1,000 for doing that and you would not think twice. And yet we are cavilling at the thought of small employers going to an adviser to validate their choice of pension scheme.
“All the evidence suggests that individual employees like to do things online and I believe a lot of member decision-making will be self-service. Advisers need to focus on the employers and there are more than enough of those to go around.”
He points to the example of Morrisons, which has already started auto-enrolment, as evidence of the move away from one-to-one advice for employees. He says: “Morrisons has now adopted a system called ‘Save your dough’ and if you look at that, it is just like Moneysavingexpert. That is what people want, that is the future. The supermarkets get that because they understand their customers, but we in financial services really haven’t got it yet.”
Tapper’s usually positive demeanour shifts, however, when we move on to the subject of pension charges. He is livid about the inability of fund managers to disclose all the information he asks for and, as a result, refuses to advise clients to choose active fund managers.
“How can we have an industry that does not know the cost of its own products? That is madness. If we do not know the simple things about how we are paying for stuff and why, how can we possibly know if we are getting value for money? We can’t.
“I am on a real mission on this. I want clarity, I want to know what my clients are paying for and I want to know they are getting value for money. Until I can know from active fund managers what I am paying for, I will continue to use passive funds. I can’t justify advising on something I don’t understand.”
Tapper also wants to see better governance standards in trust-based schemes, especially when it comes to encouraging members to shop around for an annuity. He says the quality of occupational schemes is likely to improve if there are fewer, larger trust-based schemes.
“There is an issue with shopping around because at the moment there is less chance a trust-based member will shop around than someone in a contract-based scheme. That is a rank failure on behalf of occupational trustees to do their job.
“I am coming round to the belief that we need to have full-time, professional, quality trustees doing the job rather than this Mickey Mouse system where we have loads of trustees of tiny schemes who have no idea what they are doing. That is not good governance. The big worry is that if we do not get governance standards in order across the sector then the reputation of auto-enrolment, which is still in tact at the moment, will be put at risk.”
As our interview continues, the conversation lurches from the Government’s pension reform agenda (“Steve Webb has done an incredible job to get auto-enrolment off the ground”) and the launch of Nest (“It’s a bloody good deal but the Government spent far too much money on it”) to Tapper’s time at Allied Dunbar (“Believe it or not, it was one of the most professional organisations you could work for in financial services in those days”).
But there is one issue I am desperate to talk to him about before he gets on his train to Brentford: social media.
For those of you not yet initiated to the interconnected world of LinkedIn and Twitter, Tapper is something of a guru. His blog is read by 10,000 people a month and, according to The Times, is “one of 10 websites and blogs every investor should bookmark”.
I want to know how ambitious he is and how important he thinks social media will be in financial services in the future. The answer to both is, “very”.
“Social media is the way forward but not in ‘walled gardens’,” he says. “It has to be social media done in the way Moneysavingexpert does it.
“I am now up to about 10,000 hits a month on my blog and I have to get to 50,000 before I become credible to advertisers. But we haven’t even begun to scratch the surface. I’ll know I’m successful when I start getting comments from people who know nothing about pensions.
“That is when I will start feeling like I am the business-to-business Martin Lewis. That is what I want to be. I want to do for savings and investment what Martin Lewis has done on cash saving and debt – and I think I can.”
Auto-enrolment: “Individual employees like to do things online and I believe a lot of member decision making will be self-service. Advisers need to focus on the employers.”
Active investment management charges: “How can we have an industry which does not know the cost of its own products? That is madness.”
Trust-based DC scheme governance: “We need to have full time, professional, quality trustees doing the job rather than this Mickey Mouse system where we have loads of trustees of tiny schemes who have no idea what they are doing.”
Social media: “Social media is the way forward but not in social media in ‘walled gardens’. It has to be social media done in the way ‘Moneysavingexpert’ does it.”