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.
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