Steve Bee: We need a national advice service

A national advice service, free to use at the point of need, would transform our society

Giving an individual financial advice is a complex and difficult thing to do. There is no doubt about it: advisers shoulder a great deal of responsibility when they recommend a course of action for a client to take.

That said, it would be great if advice could be made available to everyone. All of us are confronted with challenging financial decisions throughout our lives but only a few can afford advice in the way it has developed in the UK over the last 50 years or so.

There are simply not enough advisers to go around and seeking them is too expensive for many people. As such, advice has become a niche area of expertise. It is not generally available.

There is much talk about the supposed “advice gap” and what can be done about it. But constant talk, like constant consultation, is never likely to produce a concrete outcome.

The solution? The Government should act immediately to make financial advice available to all with a national advice service.

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The development of robo-advice should eventually spawn processes that can be used to bring genuine advice to the entire population. With the guidance of the financial regulators, a national advice system utilising internet-based algorithms could be a realistic possibility by 2020.

A national advice service, free to use at the point of need, would transform our society. But what of those providing advice in the existing profession? In my opinion, it would not necessarily affect their livelihoods.

Indeed, it may well have the positive effect over time of encouraging more people to seek that specialised form of advice.

A national advice service could also act to ensure the wider population is made aware of major financial issues.

How useful would it be to tackle the worrying rise in consumer debt en masse, for example, and provide people with genuine help in getting their finances onto an even keel?

It could also have an important role to play in terms of general financial education. An independent Government-funded body would have been useful to the so-called Waspi women had it been around in the 1990s with a remit to ensure the seismic changes wrought by legislation at that time were brought to people’s attention.

Some in the financial services industry would say there is no need for such hand-holding and that people should look out for themselves. But I disagree with that.

Our industry has never taken on the role of provider of general financial education and widespread supporter of the financial needs of the population – and I doubt it ever will. It is insular. Its focus is on its own profitability and responsibilities towards those lucky enough to be able to afford its services.

There is nothing wrong with that but we are fooling ourselves if we think we have within that structure a potential solution to the advice gap.

Steve Bee is director at Jargonfree Benefits

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Comments

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

  1. Whilst this proposal sounds all very rosy and Utopian, surely the staff of any National Advice Service would need to be suitably qualified (QCF Level 4 minimum), regulated (which would mean the same slew of levies as the rest of us have to pay) and backed up by relevant PII? How many people meeting those criteria are likely to apply?

    How much would a NAS cost? Who would pay for it? Would this NAS be authorised to recommend and arrange specific products? If not, customers would have to be referred to a regulated firm, in which case no money would be saved.

    And anyway, what was the soon-to-RIP MAS all about, if not to provide free advice (oops, sorry, I mean guidance)?

    I don’t think you’ve thought this through at all Steve. It’s just some wacky socialist wet dream that doesn’t have a snowball’s chance in hell of ever getting off the ground.

  2. I’ll wager his CV is already in the envelope!

  3. Advice is a ‘good thing’ with a compelling long-term business case. Sadly though government doesn’t agree. I’m a trustee of a county-wide CAB which has its formal closure next month, leaving no source of advice in the county. The reason? Withdrawal of all funding by the council. The reason for that? Reduction in funding from central government. What services are centrally funded are hobbled by treasury rules; Pension Wise, for example, isn’t allowed to do any actual calculations around pensions tax or impact on benefits, which might provide some real basis for making decisions.

  4. “It could also have an important role to play in terms of general financial education. An independent Government-funded body would have been useful to the so-called Waspi women had it been around in the 1990s with a remit to ensure the seismic changes wrought by legislation at that time were brought to people’s attention.”

    No it wouldn’t. 25 years later they would still have “forgotten” what the national advice service told them just as they “forgot” what all the newspapers, all their employers and all the TV channels told them in reality.

    We’ve been there, done that, wasted the cash. We already have a perfectly good national advice service called Citizens Advice which could do with more money, if we had any.

    There is no advice gap. There is only people who don’t have any money. People who don’t have any money don’t need advice on how to invest their no money.

  5. In any other profession you pay more for access to perceived best advice from qualified people. Government and the FCA have this strange notion that this does not apply to financial services, it is easy to provide at low cost and anyone can do it.

    There is continued pressure on the IFA community to fill the ” advice gap”, because they know full well that we are the very people who are qualified to give proper advice. There are not enough of us to go round, so if there were to be another career path through a national body it may attract more advisers, but this is a long term commitment which costs money, neither of which appeal to the powers that be.

  6. No Steve. A National Advice Service would be a complete disaster. More costs and even bigger failings. We all know too well how efficient government organisations are. I don’t think you’ve thought this one through completely.

    What we need is banks to return to provide mass market advice for the early savers, like a £50 a month stocks and shares ISA, where it is not viable for an IFA to do for a small fee. Indeed we are already heading in this direction and we have seen a few banks already back in the advice market. For simple advice, banks are perfectly placed. Just need to ensure regulation and compliance oversight is sufficiently adequate to avoid any missellings and avoid the return of a sales environment in the banks.

    • If a £50 p.m. ISA isn’t viable for an IFA to advise on, arrange and document “for a small fee”, how could it possibly be viable for any bank? It would barely be viable even on an Exec. Only basis.

      A few banks may be talking about returning to the advice market, but my guess is that they simply won’t be able to meet the rigours of compliance and will quietly back off. And nickel and dime stuff like £50 p.m. ISA’s certainly isn’t what they’ll want, any more than you or I do.

      The needs of such people are likely to be best met by DTC offerings from the likes of Virgin Money.

  7. We have a National Advice service It is called Goveernment – they have social responsibilities and a Stautory Duty – to Govern. It is just that successive Goverments have failed their DUTIES. EG Pension Freedoms the biggest Gov’t Engineered Tax Raising SCAMS since Gordon Browns tax raids, and the Windows Tax .

  8. The national advice service, invented LAPR, pension freedom, FSAVC, MIRAS, self regulation for banks, a regulator that changes its name when the pile of pooh gets too big, it dreams up all manner of financial black holes to this day, RDR, MMR etc. etc….I’m bored now.

  9. People who cannot afford advice, do not have any ‘capacity for loss’. Ergo, there is no advice gap. If someone thinks that they may need a financial adviser, as far as I know ALL Financial Advisers offer the first meeting, telephone or physical, for free (Yes, I know, “at our cost”, for those into Marketing and semantics). So, if you can get initilal advice/guidance for ‘free’ then ‘just do it’. A £50 contribution to a Bank S&S ISA if that is all you can afford, is not good advice.

  10. What a monumentally stupid idea. Fistly there is no such thing as ‘free’. What he means is that ‘someone else is paying. Second what hard evidence does he have that this would work. Thirdly how well does this idea compare to what the free market and common sense provides.

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