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Regulation motivated by politics

I read with interest Peter McGahan’s suggestions in Money Marketing and would make the following responses to some of his suggestions.

If it’s not broke, don’t fix it – a throwaway line for a lazy person to avoid work or a fair comment? A fair comment, I would say, in view of the Government’s attempts at “fixing” pensions.

In real life, things evolve in any market. Intervention on a large scale only ever causes disruption and the consumer ultimately bears the cost.

I wonder if, during my lifetime, we will evolve into a profession. A number of things will have to change. No, we will never totally evolve into a profession. If the majority of the public are to be persuaded to provide for their own financial independence, they will need to be sold to.

The “professionals” would serve those in the vast minority who need no persuasion. The absence of salespeople, on the other hand, would widen the wealth gap and place more pressure (in the form of taxes) on the wealthy clients of “professionals”.

Our industry is full of rules which, while very annoying for me, are essential to take care of the lowest common denominator. Really? It is the proliferation of rules which makes regulated advice beyond the pocket of those who need it most.

The business is insurance company-led. Too right it is. It is their intellectual property which creates the products we recommend. We only provide advice, not products. Too many IFAs are aloof of providers and poor communication and teamwork results. Advisers rely on the insurance company’s marketing material as evidence of suitability. It is called selling the benefits, my friend.

Having interviewed over 200 IFAs in the last four years, we noticed that few value research at all. No surprises there. Research quickly becomes irrelevant as changes happen during a long-term relationship with a client. I wonder how many “best” savings products were still the “best” by the time they matured?

Insurance companies need to stand together to protect us all against the individual who churns. The new firm should not accept the churned business. Now that really made me chuckle. It was not their idea to impose easily churned single-charged pensions. If providers built in sufficient flexibility into their products to cope with future changes, there would be no need to “churn”. But flexibility comes at a cost. You cannot have it both ways.

It is good to be idealistic but not to the point of naivety. I agree that the industry is far from perfect but the problem with the regulation at present is that it is politically motivated and that politics is driven by the media. That is what needs fixing.

Glyn Evans

Foster Denovo

London W1


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