Name: Alan Lakey
Company: Highclere Financial Services
One cannot reasonably argue against any measure designed to improve consumer confidence and knowledge, at least in theory. However, I cannot help feeling that this is likely to prove a monumental waste of money – our money – like so many other new-broom initiatives.
In the internet age, it is becoming increasingly likely that consumers with good intentions, but with some fear of interaction with the industry, will obtain their products online. The problem which exists, and one which the advice service can never solve, is that a large chunk of the population does not and will not take those faltering steps towards self-reliance.
The modern financial services industry was born out of the initiatives of sales people who would prospect for new customers and consequently convert the disbelievers and the apathetic into clients. The very act of prospecting for these new clients served an educational purpose and reached consumers who would never have made the initial move.
Some consumers ended up with poor value products, but to paraphrase the FSA, any plan is better than no plan, and the next phase in the educational process was a migration from the tied salesperson to the IFA.
Remember school? There was always a coterie of recidivists who refused categorically to absorb information no matter how intense the effort. In a wider, less absolute sense, this is the situation with UK consumers. To expect them to flock to advice clinics is naive. To expect the industry to fund this extravagance is outrageous.
Name: David Hollingworth
Company: L&C
As with many early announcements from the new Government, there is not a lot of detail initially available. That is certainly true in this case, and so the door is open to speculation.
Much will clearly depend on how the finer detail shapes up, but it seems clear that the service will be paid for by the financial services sector, so there will be plenty of interest.
I expect that it will be met with some cynicism, but presumably this is an effort by the Government to take real steps toward improved financial inclusion by providing a free service that will encourage more people to seek financial advice. The hope will be to attract those who are generally seen as financially vulnerable and therefore more prone to making ill-informed decisions.
Whether this service will therefore be aimed at the same group of people that would typically make up a broker’s clientele is very much up for debate. A broker’s client base is likely to be more financially literate, and as such will have already bought into the need for advice and careful financial planning. In addition, having already used an adviser, they are also likely to remain loyal, assuming they received good service.
The new service gives a stamp of approval to the advice business. Promoting advice to a wider public should be a good thing, as long as the aim is to augment existing advice channels, not replace them. So let’s hope that the detail of the scheme will bring a positive message and prove to be far from a threat to the professional level of advice that brokers offer.
Name: Dean Jones
Company: Paaleads
When the Conservatives initially suggested a free national financial advice service, it raised some concerns. Was this a scheme to replace the adviser? Would it cannibalise the advice industry and what long-term effect would it have?
Personally, I do not think that the industry has anything to worry about, and it could conversely provide a much needed shot in the arm for the industry.
The scheme aims to provide impartial and independent guidance on financial issues via ‘face-to-face sessions, telephone advisers and online information’. At present, other than this, there is minimal information available on the ins and outs of the scheme. In practice, I expect the service to open the door to consumers who in the past would not have considered financial advice – quashing the idea as an expensive unknown.
A Tory spokesperson commented that the scheme is about ‘encouraging a culture where people seek financial advice’ – which I am sure we would all like to see. The Government aims to invest £50m per year in the scheme, which we should view as money spent raising the profile of the benefits of seeking professional advice.
It is still unclear what exactly the service will offer in terms of advice, or indeed who will be at the other end of the phone. Once consumers appreciate the benefits that seeking advice brings, it will ultimately encourage many to either look to self-service websites like Moneysupermarket or to seek further advice from industry professionals, if their requirements are more sophisticated.
