The Money Advice Service says it is not designed to compete with IFAs but will drive demand for advisers and their services.
Last week, the MAS launched its free healthcheck service, which acts as a generic online financial planner and links to other MAS services such as budget calculators and comparison tables.
It also rolled out a £4m national advertising campaign which includes a TV ad to raise awareness of the MAS that will run for two months, followed up by adverting campaigns on billboards and online.
The MAS, which was the Consumer Financial Education Body, launched in April and is funded by a statutory industry levy. The healthcheck service asks consumers a series of short questions about issues such as their attitude to regular saving and how they would cope with an unexpected increase in living costs.
It then provides a personalised action plan to encourage consumers to ensure they can cope with a change in circumstances and that they have the right financial provisions for them, such as saving for a mortgage, insurance, or retirement plans.
The MAS says consumers will be signposted to IFAs and other services where appropriate.
It has a budget of £43.7m for 2011/12, with over £2m to be spent on the healthcheck service. In addition to its online healthcheck and website, the MAS has a network of 90 advisers across the UK, covering 250 regional locations and a phone advice service. It is targeting 500,000 users for the healthcheck, 90,000 users for the face-to-face advice service and 90,000 users of the advice line by the end of March 2012.
In a briefing with the MAS last week, Money Marketing asked chairman Gerard Lemos what he would say to IFAs who are angry at having to fund this service which may result in loss of business for them.
Lemos said: “We do not see ourselves as in competition with IFAs. Our job is not to take business from IFAs but to provide information to people who do not have an IFA in the first place. We have to provide a business plan to the FSA and the FSA distributes the cost of that to regulated firms. I understand the implications of the RDR and all the rest of it, but we see ourselves as supplementing demand for IFAs and even driving demand to them.”
On product recommendations, MAS chief executive Tony Hobman said: “We are never going to recommend a specific product to someone because we are giving unregulated advice. What we will do is talk generically about types of advice, which will link through to things like comparison tables but not in a way that recommends one specific product.”
Technology &Technical managing director Kim North believes the MAS should be funded by the Government rather than the industry. She says: “The MAS should put its money where its mouth is and start talking about independent financial advice on its website and referring consumers to IFAs at the end of the online healthcheck process.
“It is misleading for the MAS to say the advice is free, when it is being paid for by IFAs.”
Yellowtail Financial Planning managing director Dennis Hall says: “We are constantly bemoaning the fact that our costs mean there is a huge section of society that do not get advice because they cannot afford it. The MAS ought to help that. But IFAs help people identify their needs, and then sell to make people take action. The MAS will not be able to do that.”