Robert Reid: Experts are blind to real advice issues


Research recently published by Citizens Advice on pension freedoms showed that of those who didn’t spend the funds they realised, 29 per cent of them put the proceeds in their bank account.

In addition, 9 per cent of people had unforeseen tax problems such as tax deductions they weren’t expecting, rising to 30 per cent among people who took their whole pension pot in one go. If that wasn’t bad enough one in eight people using pension freedoms face unexpected tax or welfare losses.

Citizens Advice is an acknowledged expert in state benefits. Given that, how did its delivery of Pensions Wise not pick all this up as part of its standard process? Or did it limit its guidance to pensions only?

I make this point as the general public may have assumed it would take state benefits in to account, especially when Citizens Advice is the default go-to with state benefit queries.

Of those who experienced tax or benefit problems after using the pension freedoms, 64 per cent managed to get these resolved and 87 per cent said this was easy to do. So in other words over one-third were unable to resolve matters or in financial services speak, one-third is the potential complaint ratio!

This research underpins my theory that what is proposed under FAMR is more about placating providers than delivering a worthwhile solution to the mass market.

Robo-advice may not be the answer as it simply seeks, in too many deployments, to replicate current process and without the regard for illogical actions/objectives of clients.

It may seem that I am stating the obvious but if we don’t engage people, we can build what we like but they won’t use it in great numbers. To be more specific those who will use it are not those disenfranchised by RDR.

In the film Field of Dreams starring Kevin Costner, it had the recurring mantra of “build it and they will come” I don’t think that will work here as matters are being over-simplified.

Just because people are not high-net-worth doesn’t mean that they have easy issues to decide upon – far from it. When we have all of these “experts” telling them what to do – based on what they would do, we have the retirement advice forum akin to the childhood game “pin a tail on a donkey”. In this case it’s the “experts” that are blindfolded! It’s like using your bike to show your kids how gifted you are then coming a cropper.

FAMR, in its current format, will not sort the problem as those who guided it didn’t have a clue about the lifestyles of those they were asked to help. What I would describe as a “Marie Antoinette” moment.

We have to reach people differently and that means using the FCA sandbox properly and not to hold on to what is not working already.

The first step is education, not of the public, but of the “experts” – please stop telling people what they should do when you have no idea of the pressures they are under today.

The Government needs to stop tinkering and provide a robust framework; the complexity of Isa options being a case in point. The recent issues over Help to Buy Isas just underlines this very point – changing the website now doesn’t absolve you.

The public need to understand consequences with regard to risk both investment and longevity. It is clear that they are taking an extremely short-term view when selecting options, as this CAB research proves. It’s time for considered action not more pontification.