Have a look at the following email sent to me by one of our more vocal clients.
I had just sent him his firm's stakeholder pension designation certificate and got the following in return when I hinted we might try to encourage membership. Please believe me when I say this is word for word as he sent it.
“Thanks for your letter received this morning confirming that Scottish Widows have logged our stakeholder pension scheme in their records.
“We do have the ScotWids poster on our noticeboard reminding people that the scheme is available and every now and then, especially if there has been some outburst in the news, I do send out a memo to all and sundry rem-inding them that they need to look to their futures and that (a) we offer the ScotWids scheme and (b) if they want to address any personal financial issues, I know a man who can help them. Leading the hor-ses to water is one thing but making them drink…boy, that can be hard.
“I'm sorry that I have so little success in breaking the apathy – half the folk are already organised (especially as several have come from insurance company backgrounds) and half can barely afford their rent/mortgage/ food so don't have retirement on their radar. Yes, I know!!
“I'm fascinated by all the current fuss about the great pensions black hole and the Government grumbling that not enough people are saving. The hypocrisy of it all. It was Gordon Brown who nicked £5bn/year out of the pension companies as soon as he came to power and there is no sign of him giving it back.
“There are no incentives to save these days. If you have nothing in the bank when you retire, you'll be looked after by the state/taxpayer but if you've been prudent, made sacrifices and saved, you'll be taxed on your savings and you won't get any state benefits. If you make capital gains, you get taxed, if your house appreciates, you pay inheritance tax and stamp duty (and the recent suggestion that people should pay higher stamp duty on their houses the longer they have been in them gave me apoplexy). If you pay for private education or medical treatment, (i.e. you don't dep-end on the state), you get no credit for it. And so it goes on.
“I'll admit that there was probably some sharp practice in the financial advice industry but that has all been regulated to death now. So I do think it is up to the Government to take the lead (sacrificing fat-cat Civil Service pension plans to start with) before dumping yet more confusing legislation on everyone. The healthiest thing in all of this is competition and market forces, but that's anathema to this lot! Rant over. I feel better now.”
Suffice it to say, I thanked him for his candid note and agreed that there was room for improvement. If I were a politician or civil servant involved in financial services, I would be extremely worried by this. The frustration, anger and desperation are palpable. If an intelligent, pleasant and wealthy investor is thinking like this, what on earth are most other people thinking?
Surely this is what is causing the obvious paralysis that we are currently experiencing? Our client has summarised it perfectly.
What he does is touch on the crucial point of getting people who have little spare money to put aside their precious monthly surplus instead of the next package holiday.
The trouble is, as our client points out, they are all so confused and unconvinced by the system that they would rather go for instant gratification than gamble on something that app-ears to be in a bit of a mess.
The easiest thing to do now would be to whine on about our rule-makers rather than make an effort to help in the lobbying process of improvement. So my suggestion is this – we need to compel those in power to leave things alone more often.
If a system is working, have the courage and honesty to say so. If yet another well-meaning politician suggests it needs changing – object.
The ones with the real power in this process are the life offices. If they could only have the foresight to stand up to what they honestly believed was right, many a recent disaster would have easily been avoided.
Tom Kean is compliance officer at The Analysts