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Martin Lewis: Advisers ‘reputationally damaged’ by RDR debate

Martin Lewis 150x125

Moneysavingexpert founder Martin Lewis says he is a “genuine fan” of independent financial advisers and warns the industry has been “reputationally damaged” by the debate around the RDR.

Speaking at the NAPF conference in Liverpool yesterday, Lewis (pictured) said his website rarely discusses pension issues due to concerns it will be deemed to be providing regulated advice.

He said: “I am genuinely a great fan of IFAs but we have seen them hit back on by the regulator and they will not be allowed to take commission any more. That debate in itself is reputationally damaging for the IFA industry.

“People can come to websites like mine but we do not really talk about pensions because it is a regulated industry, so it is very difficult for us to do so. Because it is regulated IFAs do talk about it, but the commission bias is being removed so it is not clear where people will access financial advice.”

Lewis also warned there is a “monumental” lack of trust in pensions and urged the industry to rethink the way it communicates with people.

He said: “The pensions industry is overly complex and reputationally damaged. I am petrified that many of our populous are going to retire on a cold baked bean supper. The biggest problem is there is a monumental lack of trust in the financial services industry at the moment, and that includes pensions.

“We are finally moving away from the idea that the bank manager is your friend. People are beginning to realise that when you walk into a bank it should not have a massive sign saying ‘adviser’, it should have a massive sign saying ‘salesman’.”


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There are 24 comments at the moment, we would love to hear your opinion too.

  1. David Trenner - Intelligent Pensions 18th October 2012 at 8:45 am

    Loved this para:

    “We are finally moving away from the idea that the bank manager is your friend. People are beginning to realise that when you walk into a bank it should not have a massive sign saying ‘adviser’, it should have a massive sign saying ‘salesman’.”

  2. Martin, the crux of your article appears to revolve around the perceived commission bias. There is no ‘bias’ it has been an alternative method of remuneration for clients that can’t/won’t pay fees. The FSAs own commissioned report into commission concluded there was no bias, a fact they chose to ignore.
    The removal of the commission option is detrimental to the client as he does not have that choice now – ergo less people will choose to pay for advice, and more people will end up reliant on the state – even for pensions (even NEST has an opt out).
    The vast majority of advisers will tell you that when given the choice clients overwhelmingly choose commission as the remuneration method – with full disclosure to agree the amount.
    Since when has less choice been good?

  3. oddly enough I agree with Mr Moneysupermarket.

    highlighting the costs of advice is no bad thing as a client/punter pays.

    the failure of RDR is that if you are Tied you can carry on regardless. this may be why some Banks are tying to their own life companies and or others.

  4. We're All Doomed!! 18th October 2012 at 9:18 am

    “People can come to websites like mine but we do not really talk about pensions because it is a regulated industry……….”



    So why is there a section on Pensions on your website, Martin?

    and Annuities……

    and Mortgages…..

    and Insurance…..

    Last time I looked, they were also regulated.

    So, it’s not “rarely” discussed on your website at all, is it? – It’s a permanent feature.

    What respect you did have has been lost in one fell swoop, I’m afraid.

  5. Behave Chris22, had our industry made the required moves toward RDR a decade ago then clients would have already come round to the idea that you need to pay for advice. Good quality advice. Commission has the industry rotten to the core and everyone knows it.

    Was sitting an exam on Monday and overheard 4 advisers complaining bitterly about RDR – they were sitting R06 (not for the first time) and couldn’t believe the audacity in the FSA “making” them do more exams and how “Bonds weren’t goin to be the same come January”.

    There is much to change and it starts with us advisers.

  6. Mr Lewis, you should try working within the regulated environment, I know your views would change.

  7. @Anonymous 9.20am

    Maybe the change should have started with you passing the exams 10 years ago and not 10 weeks before the deadline? I think maybes its you that needs to wake up!

  8. So you claim that your site rarely talks about pensions, so I thought I would have a search on your site to see how many articles there are on pensions which you rightly point out is a regulated activity which money-saving expert and yourself do not hold licences for.

    The below link proves that your site contains 10 pages worth of articles so maybe you’d like to come back on money marketing and explain why continues to break the law on marketing pension information under the Financial Services And Marketing Act 2000

    I have forwarded this article together with the information that I have found on your site to the FSA and maybe money marketing would like to get a response from the regulator on their viewpoint of websites continually breaking marketing regulations by using the journalistic principle exemption which Martin clearly isn’t. After all he derives his income from pay for clicks advertising which is clearly covered by the FINANCIAL SERVICES MARKETING ACT 2000

    If we going to have a system of SPS certificates and authorised individuals at least the FSA should enforce regulations and stop websites like this which clearly undermine that system.

  9. Sadly the RDR cliff edge mentality will prevail, providers will do everything possible to ensure that for the slightest excuse they can turn off commission renewal and trail payments. Their profit margins are under pressure, they KNOW that retail investment levels, currently lower than expected, will fall even further.

    Moneysupermarket do not provide advice on any area of fincial products, they simply provide information based on criteria input by what are possible more financially aware individuals from what I can see and good luck to them.

    As for iFAs problems in maintaining our businesses, maybe one answer that I am sure no providers have considered is to “buy back” the IFAs renewals as if they were selling the business.

    That would resolve a number of issues about trail and renewal, place IFAs into a positive cashflow situation post RDR deadline and then we would have time to work within the new framework and get on with our job.

    Has anyone put this to a provider yet?

  10. Back in the early 1990s I used to decry the volume sales by companies such as Abbey Life and Allied Dunbar.

    What is now crystal clear is that these companies, even with their front-loaded charging structures, provided a persuasion and a conduit towards financial planning that is totally missing from todays world.

    Looking back we can see that far more people were saving and saving in an average plan with average charges and average fund performance is absolutely better than todays no save culture.

    The RDR merely reinforces the inability of advisers to deal with low net worth consumers

  11. The primary though by no means the only reason why pensions are reputationally damaged is, I suggest, very considerably less the fault of advisers than the consequences of 25 years of destructive meddling on the part of successive governments and the point blank refusal of the current government to address the annuity trap. The annuity (rates) trap is the single biggest deterrent to locking away money in a pension plan ~ ask anyone. Add to that:-

    1, the removal of Contributions Insurance,

    2. the removal of life cover as an integrated element of a PP,

    3. the removal of the facility to reclaim the tax credit on dividend income,

    4. the 55%/35% death tax charge on unspent funds post-vesting,

    5. lowering the annual input allowance,

    6. lowering the LTA,

    7. all the media rah-rah about high charges (which is largely history),

    8. the bewildering complexity of all the paperwork on pensions,

    9. DB schemes being closed or wound up left, right and centre,

    10. large companies such as BA with scheme liabilities greater than the value of the company itself ~

    the list goes on and on. Is it any wonder people are turned off pensions?

    So how’s all this supposed to be the fault of the industry in general or advisers in particular?

    As for commission vs. AC, the mechanism for extracting it is broadly the same, so what’s the problem if you’ve always been entirely open with your clients about what your services are going to cost them? We can’t reasonably decry bank sales people flogging bonds with excessive rates of commission but then complain about measures to put a stop to it just because the same set of rules will apply to us.

  12. Whilst I accept that the removal of commission as an option for paying the cost of advice reduces choice and, therefore, is arguably detrimental – we need to focus on the bigger picture.

    Commission is paid for by the client – albeit in the long run – and many consumers are unaware as to the impact of this commission and (perhaps) it’s even existence and what they are getting in return for these costs.

    I have been approached in the past by potential clients who have queried our firm’s transparent charges for advice and suggested that they could go to their bank and get the same advice for free. This for me speaks volumes about the current ‘market’ for financial advice.

    By improving transparency and agreeing with a client the ‘cost’ for involving an IFA (or other type of adviser for that matter) should begin to address many issues.

    Furthermore, removing commission bias will also improve consumer outcomes and ultimately lead to the adviser having no conflict of interest with their client. Clearly this should already be the case but commission bias clearly raises issues.

    Therefore I would agree that consumer choice is reduced – however I think focussing too much on that is missing a large part of the overall picture.

  13. So the enclosed article below:

    Pension need-to-knows
    The 15 key points for retirement saving

    Which can be found on the money-saving website at

    Doesn’t constitute advice then?

    I think the regulator needs to give it very clear guidance on what websites can and cannot do as at present there seems to be a free for all.

    Although Martin site seems to be well run there are plenty of other examples that are not so well run and where does the consumer gets compensation or indeed complained to when these websites provide misleading information.

  14. How much commission does Martin receive for every click?
    Does he really think people would pay if they had to enter payment details before access to information from his website?
    Hypocracy on a grand scale.
    Perhaps we should all set up money saving websites in direct competition?
    At least we would not have the horrendous costs associated with being an IFA.

  15. The discussion seems to assume that RDR removes the commission option for payment of fees. But what is to stop an IFA agreeing directly with a client to take payment in the form of a percentage on invested funds? The outcome would seem identical – so why all the fuss?

  16. Re Anonymous 9.20am
    Typical response to an RDR debate. I was referring to commission, not exams. I am wholeheartedly in favour of higher standards through exams. These are two entirely different parts of the RDR process. If commission is so bad why has it not been banned from protection and general insurance, mortgages and tied business – not to mention Europe where they refuse to ban it? This is an ideological change not a practical one, and I have yet to be convinced by any of the arguments put forward as to why it will be better for the client. A fee paid either by deduction from a product or out of the client’s bank account is still cash that is not invested and amounts to the same thisng. A pension or savings with commission is still better than nothing at all – which is the likely outcome for many.
    Nothing against fees, we should embrace it but commission is still valid in my view.
    To think that the vast majority of clients will ‘come round’ to fee paying is hopeful at best, and Martin is right about one thing. IFAs will suffer because of this – in my view the 80/20 rule will apply, only the top 20% of clients will have the ability or desire to pay fees for the advice

  17. Financial Services Reputational Damage is primarily due to three small but very important letters – FSA

    Alan Lakey is absolutely correct and illustrates why No sales = No Distribution. And as I have said many times you cannot re-invent the wheel !

    Widespread Commission bias – one word EVIDENCE ?

    Will we be talking about fee bias in 2013 ?

  18. Martin 'Moneybags' Lewis 18th October 2012 at 11:50 am

    FACT – Adviser numbers will continue to drop over the next few years, and will not be replenished by new blood into the industry.
    FACT – Those advisers left behind will have to pay a larger contribution towards the costs of regulation.
    FACT – A large % of the general public will be unable or unwilling to pay for financial advice.
    FACT – The general public will be forced to turn to websites like MoneySavingExpert for advice(?). Whether Martin claims to or not, the fact is the public interpret his words as advice!
    FACT – This means more profit for, the new owners of Martin’s website.
    FACT – In truth Martin doesn’t give a monkey’s as he’s already made £87 million from the sale of MoneySavingExpert!!!!
    FACT – The public will receive no protection from the FSCS when they make their own buying decisions.
    FACT – No advice = no risk for the FSA, and less strain on the FSCS. This is the real objective of RDR.

  19. In all this argument about comission v fees etc has anyone carried out a true analysis comparing the impact on returns:

    1. Commission basis
    2. Customer Agreed Remuneration
    3. True fees which have to be paid out of income and so are not available for subsequent investment

    Until this is done the cry about clients don’t know about the impact of commission on returns is a mute point.

  20. Thanks for some of the comments above – many of which agree with the principles I was talking about.

    The main point I was making was about trying to encourage people to plan for their retirement, and overcoming the poor sentiment many members of the public have about pensions.

    Slightly depressingly though, and for reasons I don’t understand, a significant minority of commentators above seem to be on the attack in the comments above as if I were attacking the IFA industry.

    Please read what it actually says (or better watch the video of the actual speech) – my point was the DEBATE has caused repuatational damage.

    As I’ve said before I remain to be convinced about the RDR as I think it may cause less people to get independent financial advice and on the whole I would very much prefer people to see an IFA than get pension or investment advice from their bank. Though I hope in the long run to be proved wrong.

    Sadly though I see much feedback from many who don’t trust IFAs because of reading articles about RDR debates – I don’t share that view – but can’t ignore that I read it and do believe there has been reputational damage to the industry because of it.

    I must admit to being slightly depressed when reading some of the above comments, yet again which seem despeate to find a hole and attack – even though I belief both my own attitude and those of my site are very supportive towards using IFAs.

    As for ‘rarely discussing pensions’ please don’t start slamming me for a quote in an article without hearing the context in the entire 20 minute speech.

    My site does hardly cover pension or annuity PRODUCTS which is what I was talking about. We don’t pick best buys, we dont list performance or give investment help.

    We do have basic general guides about how pensions and the state pension work, to try and encoruage people to start thinking about such decisions.

    Within those we suggest people get further help from IFAs Though sometimes I do question why we bother when reading some of the above.

    PS please don’t pick this apart word by word – its a monday night at 9pm Im writing this at speed.

  21. Martin – I think you explained that quite well, and was indeed what I read into the article. I’m inclined to think that sometimes the letter RDR cause so much “red mist”, reaction is often just instinctive. Perosnally I too dount RDR will solve much, and will certainely create another set of issues for consumers.

    Whether the benfits outwiegh the drawbacks remains to be seen. Pity as I think there were far simpler options which could have been taken.

  22. Incredible.

    I agree with this numpty for once.

    However, he remains ‘reputationally damaged’ by his advice in relation to Icelandic Banks.

  23. So one of the best known, most widely used consumer advocates, Martin Lewis, says he is a big fan of IFAs and he gets this crap from folks.

    Few of the moaners have the courage to put their full name.

    I really do think it is time some people had a reality check.

    Financial advice does have a bad name amongst many consumers. It needs more people like Martin to explain the benefits of seeking advice to consumers.

    I’d like to see Money Marketing get the moaners to put up the evidence behind their claims. Where is MSE breaking the FSMA2000? I can’t see it myself.

  24. Martin
    Thank you for some great comments and some much needed support for our industry.

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