I read with increasing amusement the claims that financial planning advice can be adequately paid for within a 1 per cent charge or that clients would willingly pay a fee for the same.
I admit with great regret that I have not heeded well qualified professional advice after having paid substantially for a consultation, and I suspect I am not alone.
Think how many of us have given up valuable time (and in some cases even paid) to attend training courses and yet never applied the valuable information thus imparted.
Week after week I read about how the clever old IFAs turn to new markets to earn a living now that stakeholder rules out pension advice as the lucrative industry it once was. Do we believe for one minute that this will go unnoticed by the powers that be, who obviously believe we are grossly overpaid? No, of course not, commission will fall across the board.
Many believe that compulsion will be inevitable in the stakeholder age but will compulsion fall on the employer, the employee or even the adviser?
Who needs incentives when you have compulsion up your sleeve? After all, compulsion is much cheaper than offering incentives or paying for advice isn't it? And it's quicker and simpler. Just look at the advantages:
No need to consult individuals on their current situation/needs/affordability/suitability/attitude to risk/reward/timescale, etc.
No need to fill out exhaustive fact-finds with no boxes left unfilled.
No reasons-why letters.
No cooling-off notices.
No servicing requirements.
No expensive advertising (sheepdogs are fairly cheap).
No need for tax relief on contributions.
More premium tax on compulsory contributions.
No need to research the correct provider (but still form a select committee to create a few jobs) And with a bit of luck, and a following wind, the wealth gap will evaporate, the NHS will spring back to its feet, the average amount of life cover per head of working population will crash through the £30,000 barrier, no one will be destitute in the event of sickness or unemployment and, of course, no one would dare give the scheme a bad write-up.
In a democratic society, therefore, the Government would be left with a straight choice – give the public financial incentives to take and implement advice, allowing for a regime that provides an incentive for the adviser to get paid only if people act on advice, or introduce compulsion and hope to get re-elected.
Or you could have no incentives and no compulsion and watch what happens.