If you were offered the choice, what would you want – guidance or advice? I know which one I’d take every time and I suspect many people in my position would also be looking for the certainty and protection of advice rather than the severely watered-down guidance which would be on offer. After all, what is ‘guidance’ at the end of the day? Is it leading the horse to water, which in effect is advice without the recommendation or the regulation? Or is it a simple outline of the options available – if it is this then the big questions are, what options are right for me and which should I actually choose?
I am of course talking about the Government’s new commitment to providing pension savers with access to ‘free guidance’ from next year and, while I am completely in support of giving those with a pension flexibility and the opportunity to do with their money as they so wish, I am also keen to ensure that those individuals get regulated quality advice from a professional in their field, rather than guidance which could easily lead them down the wrong path.
In effect ‘guidance’ is a very poor half-way house because, as many have pointed out, it can only ever be a generalised version of the advice that is required. It’s not going to be personal to the individual but instead is likely to cover off a wide range of potential options without actually making sure the person understands them, and without truly delivering a range of specific recommendations for their wants, needs and circumstances. It is quite likely that most people will leave their ‘guidance’ interviews in need of one thing – advice.
And therein lies the opportunity for later life and retirement specialist advisers working in the market today. Because one thing guidance might achieve is getting those who have new, flexible access to their pension, interested in the range of options that are available to them. It is no longer a case of ‘annuity or bust’ but a chance to have unfettered access to their monies in order to achieve what they wish to. They may not have a clue about the specifics of what to do with their pension pots but they should have a greater understanding of the options. And this of course is where the specialist adviser must step in.
Much has been made about the fact that guidance is only likely to be superficial because to provide anything more will be particularly costly. And there is much to be said for this argument. However, even factoring in the cost of advice, our profession should be able to show that using a specialist, taking their recommendation and using their pension pot in specific ways will actually either earn them more income, or ensure their pot goes further, or hopefully both.
This is the value of advice over guidance and it is now up to the later life profession to bang the drum over the next 12 months about what guidance will offer individuals and what it will not. It is obviously particularly galling that advisers are having to (in part) pay for this guidance but there does lie within the idea (and its execution) a major opportunity for advisers to be the post-guidance go to option. No-one should want individuals to make key retirement decisions purely on the basis of the guidance being suggested and therefore it is up to us to position ourselves and our services in order to provide specific, suitable advice for the individual concerned. This does represent an opportunity for our profession and we need to start making the most of it immediately.
