The more I think about what it means to be independent, the more I realise there is some kind of moral stance to be taken here.
I know enough ex-bank, execution-only and certain other tied advisers who tell me their previous life was completely restricted in every sense.
They all have ways of glossing over their own shortcomings to the point where there must have been some kind of regulatory dereliction of duty, not to mention a moral one.
Indeed, despite our profession’s written undertaking to act in a moral sense, this is a simple notion being openly avoided every day.
One could argue such advisers are shirking the moral duty of care simply by existing.
However, trying hard not to get too philosophical about this, there are more complex areas such as defined benefit transfers that really feel like they are on shaky ground. There are several observations that make me feel uncomfortable.
There is a complete – but not entirely clear – dereliction of responsibility regarding DB pension transfers by effectively passing the liability to the client.
Sure enough, this has been spotted by the FCA, which has dodged the bullet by insisting any transfer over £30,000 comes with advice.
But what an arbitrary and frustrating idea this is, especially for those clients who think they understand the subject and who simply want to transfer without the unnecessary involvement of a high-charging adviser.
Obviously that is a different story for another day.
I would argue most clients do not understand these things, with non-IFA purveyors of advice publishing “guidance” designed to placate them with their carefully-worded caveats and warnings.
It is a strong suspicion of mine that hardly anyone reads them, let alone understands the repercussions. Even worse, will the client know if they are giving up guarantees?
And will they ever find out, blissful in their ignorance? They will not know what they have lost until it is gone.
When is advice not advice
In any case, that is of no concern to the discount firms. What a great model. The literature makes it all sound lovely, shiny and fresh. It may well be, and it is certainly easier for clients to see and manage their holdings.
But are we sure that, with all the encouragement and confident sounding notes, that the client is not being fooled (and I do not mean maliciously) into believing they are receiving advice?
Even though it says they are not, will people read it or actually understand it?
I have learnt in all walks of life that even though you think you have made something staggeringly clear, people are still perfectly capable of missing the point.
“Are we sure that, with all the encouragement and confident sounding notes, that the client is not being fooled into believing they are receiving advice?”
It is up to all of us – but mostly the regulator, to make sure the investing public fully understands the difference between actual, regulated advice, and perceived advice.
The difference between quality information and actual advice is very subtle and I would wager we are building another problem for our sector by being too laid back about the difference.
The current diaspora of DB assets to defined contribution is a potential disaster in the making. Equally, though, it may be a once- in-a-lifetime chance to really boost pensions. The trouble is, none of us know.
Tom Kean is director at Thameside Financial Planning