Well, many thanks for your views. I cannot pretend I was expecting a clamour of endorsement and, no surprises, I did not get one. I do not expect everyone to support how we are going about our work but I remain frustrated with the continuing misunderstanding – willful or otherwise.
Responses seem to fall into three categories. Without turning this comment into an essay, let me take them each briefly in turn.
First and foremost is the perception about how much people are paying for the service and its value for money. IFAs pay for around 16 per cent of this year’s £46.3m Money Advice budget – £147 a year each. None contributes to our debt advice activity. But I understand the anger and we have committed to working with the FSA to develop a long-term funding model from the industry levy.
One year on, we know we have reached over 1.3 million people. It is a start of a long journey to fill the enormous 19 million-strong advice gap by getting to 11 million people annually in five years’ time. It will make for a more financially educated population, with sensible financial behaviour steadily becoming the norm. That is what the Financial Service Act demands. Common sense tells you that many of these will be approaching IFAs for their expert advice.
Next is the perception that we are merely duplicating IFAs’ work and the role of others in the advice sector. I accept that we may overlap in places but we occupy a gaping chasm in the advice landscape overall. This week’s unbiased.co.uk report, showing only 18 per cent have ever used an IFA, reinforces this.
At one end, Citizens Advice provides an outstanding service, predominantly for those in crisis, while smart commercial operators such as MoneySavingExpert.com serve the other end. The former promotes equality and diversity and helps with housing, benefits, employment, relationships, legal and (with funding via us) debt advice. It has 70 years of experience and a combined income of over £250m. The latter, newly incentivised as part of moneysupermarket.com, generates revenue from commission on sales.
We are totally different to both. We are focused on providing independent and free advice to the millions who face uncertainty about money at key life stages. Nor do we seek to supplant what IFAs do. In fact, we know from correspondence that many IFAs use our tools, including the ones on our recently upgraded website.
Finally, there is the issue of our marketing spend. In fact, we have not spent anything like £20m yet – that is what is in the budget for 2012/13. We need to engage people and encourage them to take action on their finances. Some comments bemoan that we are unknown. As a newcomer, it is hardly surprising and why we need to drive awareness so we can help millions who need our help.
Thanks to everyone who left a comment. I hope Money Marketing readers will keep such views coming in as we develop our next business plan. We will be consulting later this year and are keen to get the views of policy makers, consumer and advice organisations and all sections of the financial services industry.
Meanwhile, although I was not surprised that Money Marketing did not cover it, please take a look at our website, whose first upgrade took place earlier this month.
Gerard Lemos is chairman of the Money Advice Service