Pension providers are urging government and regulators to “be brave and bold” when it comes to redrawing the boundary between advice and guidance.
In its response to the government’s discussion paper on this boundary review, Aegon says it is backing targeted suppress as the intervention most likely to tackle the current advice gap
The discussion paper has been issued jointly by the Treasury and FCA, with responses sought from across the industry.
Aegon says its was challenging the government to “be brave and bold” with changes rather than erring too far on the side of caution. Aegon pensions director Steven Cameron says: “The Advice Guidance Boundary Review offers a real opportunity for progress in closing the highly persistent advice gap.
“A triple whammy made up of difficult economic conditions, people living longer and individuals having to take on more personal financial responsibility means regulated advice has never been so valuable and must be encouraged to thrive. But millions of individuals are stuck between the ‘rock’ of holistic advice with a substantive price tag and the ‘hard place’ of generic information which doesn’t encourage engagement.”
He adds that the company sees the “standout proposal” as targeted support, which could have “game changing potential”.
Cameron says: “The ability to offer suggestions for ‘people like you’ could turn the current cliff edge between information and holistic advice into the continuum of support the discussion paper seeks. But for this to succeed, adviser firms must be allowed to offer targeted support, not just manufacturers as the discussion paper suggested.
“Regarding the other proposals, further clarity of the current advice / guidance boundary is unlikely to move the dial, although some FCA-approved template letters to aid clients with excess cash holdings or on retirement options might be beneficial.”
He adds: “Similarly, we could see a modest increase in the use of simplified advice if the FCA worked with firms to identify examples of narrower customer needs which could be met commercially through this route.”