The fact that it is partly funded by advisers themselves but offers no clear pathway from Guidance to professional advice is one major bugbear but we should also not forget the fact that guidance offers no solutions, it simply offers information and potential avenues to explore, with no individually-focused recommendations. That, after all, is the job of the adviser but, there’s no ‘guarantee’ that those leaving Guidance will have any idea about where to get advice, let alone take it up and act on it.
That said, the Government had to offer some support to those who would be able to access new pension freedoms and rather than setting up a process which put individuals in touch with advisers, they formed Pension Wise instead. The success of Pension Wise is almost impossible to judge because despite the fact that, we are told, 18,000 appointments have been completed since April, there is no way of knowing what the outcome has been. Despite the fact 925,000 visits have been made to the website, how many of those resulted in an appointment and, quite frankly, how many of those were journalists and advisers attempting to get a handle on what Guidance actually means and what it includes?
And here’s the big issue around Guidance – what does it cover and, rather crucially, what doesn’t it cover? Because we are continually told that Pension Wise appointments may cover housing wealth – a rather large asset – in the future which tends to make me feel that (at present at least) property wealth is not covered at all. Instead, the focus is on the value of the pension pot and the new and old ways the newly-retired – or in this case the over-55s – can access their money. It probably gives warnings about the tax issues on drawing down pension pots as cash and it probably covers off the potential implications of doing this, but, it certainly does not give a recommendation and it does not cover off the financial needs of these individuals in the round.
In a way, Pension Wise was designed to help ensure that the over-55s did not make serious mistakes when it came to accessing their pension pot, however, it has no way of stopping this from occurring anyway. An individual can move through the Guidance process, be provided with enough information to make them think about what they’re doing, and then they can leave Guidance and carry out any actions they wish, regardless of the consequences. To my mind, we could be storing up significant problems for the future by allowing this to happen and not ensuring there is more of a focus on moving individuals from Guidance to advice. The big question is, are advisers interested in these clients and what fee structure actually works for this demographic?
Stuart Wilson at the Later Life Academy has recently made some very interesting points about how advisers might open up their services to those who are post-Guidance but are not traditional advice takers. He has suggested a ‘first-meeting-free’ proposal – or Guidance-plus as he calls it – whereby advisers offer an initial assessment of an individual’s wants and needs. Following this, recommendations could be issued, transactions/products could be made and sold, and the adviser earns their income this way. It also means the adviser, perhaps through the LLA itself, could open up the number of sectors and product areas they are able to access so they can provide a much more rounded advice experience for the client, rather than perhaps one which only covers the advisers’ specialisms, for instance, equity release.
Certainly, at present, Guidance is a very poor man’s substitute for advice but ultimately how do we get those individuals into a mind-set where they value advice and good outcomes are achieved? It’s said that many of those post-55 are not even taking up Guidance, let alone advice, and indeed are making decisions on their own regardless. We therefore need an industry-wide push – it’s unlikely the Government will be providing any further support – around the importance of advice and the very real, and potentially damaging, consequences for those that eschew it.
