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Nic Cicutti: Advisers shouldn’t hold grudges over BoE comments

Nic Cicutti

Look, I hate giving away the secrets of the writers’ craft, but there are times when needs really must.

About 20 years ago, I was approached by a trade newspaper and asked to contribute a regular column on financial issues relevant to advisers, but with a consumer spin.

For many months I toiled away, crafting carefully-considered “on the one hand, on the other hand” pieces that were noteworthy for their attempts to be fair, inclusive and reflect every possible viewpoint before arriving at a measured opinion.

With hindsight, I regard that period in my writing as a failure. The problem with my approach back then was while it ticked all the boxes in terms of fairness, accuracy and a meditative approach, it lacked a key element – the ability to engage with readers’ passions, to really make them think and respond in kind.

To do that, you need to use language differently, to adopt a variety of literary devices like assonance, allusion, analogy, anecdote, anastrophe – while not forgetting alliteration, of course.

One of the more powerful devices is hyperbole, an extreme exaggeration used to make a point, to liven up a discussion. Hyperbole is a form of emphasis, it evokes strong feelings and creates powerful impressions. But as a figure of speech, it is usually not meant to be taken literally.

Sadly, I fear the application of hyperbole appears to have passed Apfa director general Chris Hannant by. Last week was a case in point, with the revelation that Hannant had written to Andrew Haldane, chief economist of the Bank of England, objecting to his comments that advisers “have no clue” about pensions.

What was Haldane’s crime? In a speech at the New City Agenda annual dinner last week, Haldane admitted to his audience: “I consider myself moderately financially literate – yet I confess to not being able to make the remotest sense of pensions. Conversations with countless experts and independent financial advisers have confirmed for me only one thing – that they have no clue either. That is a desperately poor basis for sound financial planning.”

“Haldane was also self-critical. He quoted research showing BoE speeches and reports are considered even more complex than annual reports from commercial banks”

I have read Haldane’s entire 8,000-word speech and it is exceptionally good, thoughtful, incisive, witty and it offers massive food for thought. Its 20-odd pages reference dozens of pieces of research from a variety of sources.

His comments about advisers came in the context of a discussion about the complexity of financial products: “There is plenty of evidence, including from the financial crisis, of financial products being made more complex than was necessary and consumers being charged a premium for buying them. This damaging cycle persists because of the difficulties consumers understandably face when trying to compare these products.”

For those who have read some of Haldane’s other speeches in recent years, the issue of unnecessary financial complexity has long been seen as central to his thinking.

In this regard, Haldane was also self-critical, identifying that most members of the public do not believe the Bank of England operates with openness – partly because they believe its leaders move in a different world from the rest of us. In his speech, Haldane quoted research showing BoE speeches and reports are considered even more complex than annual reports from commercial banks.

Haldane said: “This suggests the vast majority of the Bank’s publications may be inaccessible to the vast majority of the general public. Having assessed my own speeches, including this one, the conclusion is much the same.”

The lesson he identifies is the Bank of England must engage directly with people. When he attends meetings up and down the country he talks not just to the Bank’s company contacts but also to schools, colleges and universities and to voluntary organisations, charities and community groups.

Interesting stuff, with lots to think about – but not as far as Afpa’s po-faced Hannant is concerned. His letter told Haldane: “Advisers work hard to gain the appropriate qualifications and permissions to be able to help people make the right long-term financial decisions.

“In an environment where people need access to advice more than ever – and where the Government has committed to broaden this access through the Financial Advice Market Review – it is counter-productive to make comments that might diminish trust in the advice profession.”

Hannant offers to meet Haldane to debate this further – just as eager Jehovah’s Witnesses knock on householders’ doors and leave a copy of The Watchtower with them, so they can come back and “study” it together.

The idea of Haldane taking time to sit with Hannant and discuss the delights of the Chartered Insurance Institute’s JO2 paper on trusts as part of advisers’ journey towards QCF level 4 is a joke, of course.

What Hannant’s letter really reflects, sadly, is the chip-on-the-shoulder provincialism of a trade body capable only of focusing on a minor piece of hyperbole, rather than playing an active role in the battle of ideas about how we make financial planning come alive and relevant to millions of people in the UK. Tragic.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk. Follow him on twitter @NicCicutti

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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. Journalists shouldn’t take it personally when others criticise their lack of insight – but they do. Why? Because even journalists – and financial advisers – are human beings too

  2. Totally agree Nic,
    Much to balanced and fair to all parties however.
    Still, we are all getting older and more grown up now, what a shame.

  3. 8,000 words? Just goes to show that sometimes less is more!

  4. Lovely piece this week, Nic – important, true and very nicely written,

  5. We should all be in the business of promoting better consumer outcomes and I’m sure we are. We also all know that mud thrown in sufficient quantities can stick. You’ll appreciate, Nic, that Andy’s comments weren’t entirely helpful in that regard. It’s no hanging offence, just a bit counter productive, as we seek to open up access to good, professional advice.

  6. Pauline Forbes 26th May 2016 at 5:30 pm

    Hmmm. I’ve read the speech too and there is a lot in it that is of interest and with which Advisers would agree. The complexity and compliance arguments are well rehearsed within the community, and the point about responsibility falling too much on the ‘consumer’ rather than Providers or banks etc is at the root of many of the issues in the financial services industry today. He makes a lot of good points about where innovation is coming from at the minute (the regulator mainly) and how this may be holding growth back. Interestingly for a banker he is a fan of P2P lending….

    The paragraphs on bankers behaving more badly when they are identified as such was particularly illuminating and may have offended bankers too. But it was based on established research which is cited in the speech on the website rather than Mr Haldane’s own conclusion personally, or indeed as a Bank of England representative.

    Personally I think the comment referred to was intended to be funny, and I took it as a throwaway remark designed to grab headlines for a speech that may otherwise have received little attention. I’m sure he doesn’t actually believe that all advisers are ‘clueless’. For one thing he hasn’t met them all!

    But you also have to remember that unlike your average journalists article this is a speech that was probably screened (maybe even written) by the Bank of England’s Communications Department before it was given, and is published on their website. Its this point – the gravitas/authority that attaches to a comment being linked to The Bank of England that possibly worries the advisory community. We all know the effects a comment made with ‘authority’ can have – and how it can become ‘truth’, even when without substance.

    Sometimes its not so much what was said as who said it that matters….

    • Yes, I thought that section on bankers living up to their cultural expectations was interesting too. Haldane, by the way, doesn’t say ALL advisers and experts haven a clue, just the ones he’s spoken to. Nor does he identify WHAT leaves them clueless. It could be something genuinely esoteric – but relevant to him

  7. Problem is consumers don’t read 8,000 word speeches they read newspaper headlines and short bits of copy that say advisers are clueless- and when that comes from someone like Haldane they tend to believe it to be true.

    Very silly lines from someone who really should know better

  8. I wasn’t that surprised that so many took the remarks literally.
    But I do think that Mr Haldane could do better service if he addressed the basics.
    It isn’t so much that the public don’t trust advisers. It’s government they don’t tust. Forever fiddling with the rules (tax, pensions etc). Bleating about pensions (AE), the advice gap and savings, while the whole economy is predicated on people going shopping. We are the most indebted nation in the world – bar none Credit card soending is out of control, technology conspires to get people to loose track of thir spending (contactless payments, the denigration of cash) and the educational comprehension (not to mention arithmetic) of the general public is lamentable.
    When these are addressed perhaps some progress might be made. Don’t blame advisers fir the failings of the numpties in Westminster.

  9. Julian Stevens 27th May 2016 at 5:14 pm

    Nick Bamford ~ I agree absolutely.

    Harry Katz ~ I agree (largely, despite the numerous typos). Hence I have suggested on more than one occasion that if the government is genuinely concerned about the astronomic levels of personal debt in the UK, it ought to enact legislation to restrict unsecured borrowing from all sources to something like three months nett income (with severe penalties for any credit organisation found to have allowed this limit to be breached). But, as you say, with the economy crucially dependent on ever more consumer spending, this a nettle that the government simply won’t grasp. The finest widgets in the world are valueless if nobody’s buying them. Yet the debt balloon cannot go on inflating indefinitely ~ sooner or later it’ll explode ~ and it’s irresponsible of any government to stand by and allow it to do so.

  10. The public memory is happily very short, even for the damaging headlines the press chooses to print. We are used to the B of E and its misinformation.

  11. We are in agreement Julian. (Excuse previous typos – that’s what comes of posting from my phone!).

    There is of course a simple solution – perhaps you are not old enough to remember credit control. A cash deposit of between 25% and 30% (depending on budget changes) was required for any purchase made on ‘the never-never’. (Cash meant a cheque).

    Today it would be just as easy – any credit card spending could only be for (say) 75% of the item, the balance having to be paid by debit card.

    Sure, they may be bleating from the high street, but our current savings ratio of 3.8 might actually start to improve – isn’t this what our duplicitous government wants? Just compare our rate to Germany 17%, France 14%, Italy 10.5% and even Spain at 9.6%. Our recent best was a paltry 6.9 back in July 2013

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