By Jamie Clark, Business Development Manager, Royal London
Hot on the heels of consultations on tax relief and pension transfers and early-exit charges comes a new investigation into the advice gap, and how this can be bridged. Ever since the new pensions freedoms were introduced, concerns have been raised about how people can get access to advice. Pension Wise and some providers have tried at least to build a framework of guidance but more needs to be done.
And so the terms of reference for a 'Financial Advice Market Review' were published by HM Treasury on 3 August. These promise to examine the advice market and the regulatory framework with a view to helping less wealthy people access advice. There are no proposals so far, but the review does want to make sure that there is a market capable of supporting all UK consumers in making financial decisions. There are advisers out there already who have identified the lower end of the market and have built propositions around it but the new pension freedoms coupled with automatic enrolment will invariably mean that demand will far exceed supply. In providing an advice solution for the less wealthy, employers might be seen as an ideal conduit through which advice can be delivered to consumers. After all, that’s how pensions are being delivered. For this reason, corporate advisers, employers and their representative bodies need to be at the heart of this review. In fact, research by Corporate Adviser shows that demand for advice in the workplace will increase, many people will seek guidance; and drawdown should be an advised process.[1]
How this will all end up is anyone’s guess as there are many questions around who delivers the advice, how can it be made affordable, who pays for any new framework that is put in place, should there be a ‘safe haven’ for advisers? After the dust has settled, it looks like the advice market will expand to deal with those people currently disenfranchised from advice. There are already firms operating in this area and more are being developed every day. No matter where it all ends up, if it gets more people interested in their finances and produces good outcomes without unduly distorting the current market surely it can only be good for consumers and the industry alike.
[1] ‘Pension Freedoms: Meeting the advice challenge through the workplace’ http://digitaledition.corporate-adviser.com/CAIntelligence2015/ page 3
