Lorna Bourke concludes from the PIA's third annual report on disclosure that investors are docile.
My clients are satisfied rather than the d-word (a bit of a slur, isn't it?).
In the interests of positive and balanced journalism, I would like Ms Bourke to answer the following:
1. Does she think fee-based advice would benefit average and below-average earners? How? Has she discussed the issue with practitioners and, if so, with what result?
2. We offer a fee-based service to all our clients as an alternative to commission. Why is the take-up so low (although we would probably earn more from fees about half the time and fees are less risky with no clawback)?
3. Commission equates, it strikes me, to paying simplified fees on HP. Why is this bad?
4. If it is unfair to earn twice as much for a £100 per month plan as for a £50 per month one, then should the sales mark-up on a £1,000 camera be the same as for a £500 one? Why does she think that high-net-worth individuals are less fussy about what advisers earn than their less well-off counterparts?
5. Does the fee she is paid depend on article length, prominence, the amount of research she does, etc? Should her fees be disclosed to her readership?
6. Does she have to keep records of her articles for six years and indefinitely if they are about pensions? Do they need to be serviced at all?
7. Her example of the £869 commission for advice on which pension to purchase ignores the fact that ongoing advice is likely to be required. Is lower commission on the original sale preferable if fees have to be charged for all policy servicing and what about the effect of this on advisers' cashflow? Similar questions apply to her points on drawdown plans.
8. In my experience, those who buy big policies effectively subsidise those who get similar advice without making a similar purchase. If this is flawed, does she object to progressive taxation, that is, the rich paying more?
9. When is she taking the AFPC or equivalent? Does she believe financial journalists should be less, or more, qualified than the advisers they criticise?
10. Does she feel there is insufficient competition in financial services?
11. Would she like to see more of the population saving, investing and being sensibly insured than at present? How would she suggest this should be achieved?
12. Is she familiar with John Ruskin's comments about the dangers of buying the cheapest?
The financial services industry benefits families who lose a breadwinner and others whose health fails them, and enables ordinary people to save regularly for an uncertain future with not unattractive returns.
It needs to operate at a profit, not only for its own benefit but also for that of the public. The two interests are intertwined. Balanced journalism should promote the good as well as criticise the shortcomings, especially as the point-of-sale wrongs of the past are generally now more difficult to repeat.
Complaining about the way things are is destructive unless there is a better way of living to which the complainer points.
I invite Ms Bourke to become a positive force in the industry instead of a largely negative one.