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Robert Reid: The break in the Pension Wise chain

ReidRob

The news that the Government has allocated yet more of our money to pay for Pension Wise while refusing to publish data on the service is abject arrogance.

I so hope the inquiry recently announced by Work and Pensions committee chair Frank Field will provide the details we are entitled to. The reason I am so animated is best reflected with an example of pension freedom “working” in practice.

A client called me at the beginning of June to say she wanted all her money, which amounted to less than £30,000. She is 57. I warned her about the tax implications and pointed her in the direction of Pension Wise.

Eighteen months previously I had arranged a pension sharing order with a leading provider. After talking to Pension Wise (which, incidentally, told her everything she needed to know) she called the provider, whose first action was to tell her to see an IFA.

So she called me again. I called my contact at the provider, who accepted they had made a mistake and could deal with the request. That was the end of June.

Since that correspondence I have been feeling more and more like I am being forced into an unpaid advice position. On 7 July I had to call to chase up on the forms. They were supposed to be out within 10 working days, but I am told to wait until the end of the week.

On 13 July my client calls to tell me they have still not arrived. I call the provider again to be told it is a “learning curve” and “the first time we’ve been asked for this”. They will get back to me within 48 hours, they say.

And then what? Apparently it will take four weeks to pay the money out once they have received the forms again.

What a shambles. We were told in the press recently that 2,000 IFAs have applied for pensions exams. I hope at least that many have applied from providers.

Do not get me wrong: the concept of Pension Wise is good. However, the reality is that without a more practical management of expectations and consistent delivery from providers we will continue to see it fail to deliver what the public expect.

The guidance service is simply not being promoted in a way that is fair and not misleading. Clearly, where the break in the chain has occurred is in its promotion as advice and not as education and information.

The glib use of the term advice takes me to another pet peeve in the land where increasingly everyone is a wealth manager or financial planner, yet the number of true planners remains fairly static. I believe in the Ronseal approach: if you say you are a financial planner, deliver it.

If we tidy our house up it will be much simpler for us to bring the Government to task regarding Pension Wise. If we do not, we just give them another excuse.

Robert Reid is managing director of Syndaxi Chartered Financial Planners

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. Nice new picture

  2. Great article Rob and I agree with Nic that your new photo is excellent to reflect your slimmer self

  3. It might be his twin brother, or photoshopped.

    I must say though, you do have a look of Keith Allen about you.

    As far as the article goes, you might be waiting a long time if you expect providers to improve their customer service. We’ve all had to put up with nonsense like this for years now. A bit different if you want a new business quote though!

  4. Freddie Findlater 24th July 2015 at 1:46 pm

    Rob – made me think of this article from back in January. Particularly the quote: “some pensions knowledge would be an advantage” as part of the job description.

    http://www.moneymarketing.co.uk/martin-tilley-who-exactly-will-deliver-the-guidance-guarantee/

    • Thought I would chip in here as you may like to know that in the PW delivery centre I work we have three diploma qualified individuals (2 ex-advisers and one former paraplanner) and two ex solicitors. All of our Guidance Specialists are also studying for R08 so maybe we are after all able to offer guidance with “some knowledge” of pensions???

  5. Stephen Williams 24th July 2015 at 3:17 pm

    For me, the real Pension Wise gap is for those people who are set to inherit funds under the new death tax flexibilities. Dependant’s and others nominated to receive benefits have so much more choice and flexibility (very similar to those who are making their own retirement choices using IFAs and Pension Wise). The tax implications can be huge in some instances so careful planning is needed.

    But where is the Pension wise type support? They won’t see many FCA risk warnings! How does a beneficiary learn the complex world of flexi-access drawdown, for example? Of course, seeking advice would help, but there is a huge gap between what Pension Wise and other initiatives offer retirees which is missing for those in potentially a very difficult time of life who are left with relatively little support.

  6. I quite agree with most of what is written above, but I don’t understand why the criticism is directed at Pension Wise in particular? For the most part I think PW is doing exactly what it “says on the tin”. Users are left in absolutely no doubt that they will be only given guidance and information and will not be recommended any products/providers or be told what they should do with their money. The break in the chain is further down the line, with issues at the point of advice and/or at transaction. There’s a lots of factors contributing to this, many of which are quite understandable given the very sudden seismic change in the at-retirement market: a surge in consumer demand, huge admin burden on providers, an obligation to take advice on certain transactions even if consumers don’t want advice, a shortage of advisers with appropriate qualifications, an advice gap, i.e. a mismatch between mass market consumer needs and advisers business models (many cases either unprofitable or too high liability risk), and a regulatory environment that makes providers nervous of arranging D2C transactions.

  7. I don’t think the criticism should be directed at Pensions Wise – but the reason that it is being criticised by advisers is because the adviser community is bloody well funding it! It should be funded by the taxpayer for the taxpaying pensioner. If that were the case then maybe it would be monitored more closely by the government. However, just like with the FCA, advisers are expected to stump up cash to pay for something which really has zippo to do with us. It is a scandal that the government and regulator force us to pay for something which is a public service. We really do not receive any benefit from PensionWise as advisers, and I grow weary of working in a field where we have to pay for other people’s pay packets and defined benefit pensions.

  8. Coming from PW myself, it is becomeng apparent that many of the people we see are looking to access TFC and leave the residue of their funds invested – FAD in other words. There is an obvious gap between what PW can offer and full financial advice. Whether/when providers can offer “FAD lite” with low maintenace default fund choices would seem to be a solution with PW guidance “beefed up” or regulated advice watered down so that individuals can access the feedoms promised without (at least in their minds) paying a hefty price for them.

  9. @Graham Hughes – you are right that many people want what you suggest i.e. take the cash but leave the rest of the fund invested, and you are right that maybe some form of watered down advice is wanted by consumers. Get all of your colleagues at PW to contribute to the consultation on changing the face of advice so that those conducting the consultation are aware of what consumers want. Until the FCA gets it into their heads that their regulatory framework has created a large and genuine advice gap, such consumers will continue to be charged for full blown regulated holistic advice because that is what regulated advisers have to offer. If you and your colleagues do not give feedback individually you are letting down the consumers coming to see you. As people with no vested interest PW advisers/guiders would be a valuable source of opinion. So please persuade your colleagues to get involved in the debate, your opinion is valid as it is borne out of experience.

  10. The reason that I provided a real case was that there is a disconnect between the providers and PW plus I don’t recall criticising PW but how its promoted by others government and providers alike.
    The fact that government can use the word advice in a way regulated firms/individuals cannot/will not is the root cause of these issues. Having said that labels attached by anyone other than the end user are not relevant – as per FOS.

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