Adviser Alliance founder Alan Lakey and Pillaged! author David Craig discuss the costs and benefits of advice and whether regulators have made things better or worse.
Craig’s book, Pillaged!, claims big beasts in the financial services jungle syphon £413m a day or £105bn a year out of people’s savings. Before turning his hand to writing David worked for 20 years as a management consultant.
Highclere Financial Services partner Alan Lakey is a regular contributor to Money Marketing and has been an IFA for 20 years. Before forming Highclere he spent 13 years working in other advice firms and insurance companies.
Here are a few highlights from the podcast:
Craig: “There are too many people in the market, too many IFAs offering their services and a bit of a cull would be a good thing. If there were fewer advisers, there would be less pressure on them to sell and they would have the time to give a better service.”
Lakey: “I absolutely disagree. 20 years ago there were over 250,000 advisers. It cannot be coincidence that as that number declined, the savings and protection gap has widened.”
Craig: “Of the £105bn a year financial services costs people each year, I estimate the total cost of advisers to consumers is around £3bn a year, £100,000 each, and I think this is too high.”
Lakey: “This is the costs to the adviser, what it will cost him to survive, so we are not talking about a rip off but a natural consequence of the industry. My office costs £48,000 a year to run, If I earn £100,000 that leaves me £52,000, and I pay tax on that.”
Craig: “Testing for my book I made several complaints to the FSA about things my pension fund had done and the arrogance and total bureaucracy of the brush off was unbelievable. Our regulators have been worse than useless.”
Lakey: “There is the imposition of fees, the regulatory weight we have to operate under and products that perhaps are not the best for the client, but designed around the regulatory framework. So a big body of evidence suggests consumers are no better off because of regulation.”
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