My late mother used to test my patience when she stated, “just what I say” when I queried a less-than-clear instruction. This leads me to two terms, used in our sector, which are in the former case nonsense and the latter highly unlikely; those phrases being “execution-only” and “professional investors”.
The labelling continues to be skewed by remuneration being taken largely via products, as this continues to fog the communication process.
The determination of independence by product range is highly flawed and down to lazy regulation – until the FCA properly regulates advice then we are stuck in this no man’s land of regulating from the wrong end.
But in order to properly regulate advice we would need a complete restructure and there is currently little appetite for this, especially with a steer towards “guidance” looming.
When the RDR was mooted there was much talk of “carrot-not-stick” in the form of regulatory dividends; it has not yet shown itself so maybe we need to take the lead. The professional bodies can help by creating better practice guides but the real move will come when level six is the default for advisers, taking them to a level of greater knowledge and also better awareness of their limitations.
The introduction of guidance as promised by the Chancellor will be no easy task; the idea of just offering it at-retirement is also questionable, as it does not allow sufficient time to improve on any guidance given. Better the guidance was available at key milestones in the investor’s lifetime .
I feel very strongly that the triage needs to be ongoing and we need to engage people as early as possible.
As to who should run guidance I feel that we do this in a co-op, with each party playing to its strengths. Trying to gear up firms used to a few thousand enquiries to taking 10 times as many customers is frankly crazy. It is also puzzling as structures would not be able to manage at that scale.
Using the life offices’ call centres to filter enquiries and thereby targeting resources is the way forward – we must play our strengths at all times. We need to use new way of capturing the imagination of the youth of today and tomorrow if we are to succeed in making them aware and committed to solving the pensions issue.
We must avoid seeing everything through a product lens and instead see it from the consumer’s perspective.
There is no doubt that this will engage many. Whether that will be sufficient, who knows? But whatever is decided, we need to go forward united.
The time for delay has gone. We need action if we don’t want to leave a generation underprovided, only becoming aware when it is too late to do anything. We cannot let this drift.
So yes, words are important. The FCA will get one chance to show it has recognised the need for clear and consistent communication. What then follows regarding guidance will define the market for the next few years, and let’s hope they can take the FOS with them on this journey.
If the Cobs rules are in financial Latin then I revert to where I was with my Mum, but maybe she’s the reason I continue to challenge and question. And for that, and many other things, I both miss her and thank her.
Robert Reid is managing director of Syndaxi Chartered Financial Planners