It can be difficult to find a financial adviser, though (especially one willing to advise on a Defined Benefit transfer). Trust in the profession is lacking. Even if you can access professional financial advice, it costs a lot of money.
That’s why I’ve recently proposed the formation of a National Wealth Service.
The NHS was set up in 1948 to provide physical and mental healthcare free at the point of contact, for the majority who could not afford to ‘go private’. A national network of financial advice centres by analogy could provide ‘wealthcare’ and massively improve our financial wellbeing.
The problem at the moment is that that while there is guidance around to tell us what we could do, we’re more likely to want to know what we should do – meaning advice. A bewildering array of choices is no help if we don’t understand what they mean. And making the wrong choice could be very costly.
Early reactions to my idea have mostly been along the lines of ‘great idea, but never likely to happen’. Well, I’ve got news for the sceptics: it’s already happening! For some years now there’s been a network of debt advice centres, coordinated by the Money Advice Service, MAS (note that important word ‘advice’).
By definition though, debt advice is what you might need when you are already financially very ill. Common sense says it would be better if we knew how to avoid getting into debt in the first place. ‘Preventative wealthcare’ is what’s needed: advice on healthy choices about money. Just like the NHS is battling to get us to eat and exercise better to avoid becoming diabetic, for example.
A moment ago I mentioned MAS, which this year together with The Pensions Advisory Service, TPAS, and Pension Wise is being merged into a new umbrella organization called the Money and Pensions Service (MAPS). I believe MAPS has a unique opportunity to make a huge difference to individual lives and our national wellbeing.
By expanding beyond debt advice to take in advice on planning for retirement, how to save and how to spend, MAPS could be the progenitor of the new National Wealth Service I’m talking about. The essential framework and building blocks are already available.
Now some people – competent financial advisers, for example - might see this as a threat to their profession. In the run-up to 1948, a good number of doctors bitterly opposed Aneurin Bevan’s plan for the NHS, for just that reason. What happened? Private medical practice continued to flourish, alongside the NHS.
Others doubt whether there are enough trained advisers to staff such an enterprise. Financial advisers are a retiring breed, some say. Some have been crippled by huge increases in Personal Indemnity cover. Another threat is the growing risk of adverse judgments by the Financial Ombudsman Service (FOS).
Many independent financial advisers (IFAs) have become much more selective about who they advise. More and more are saying they won’t take on clients who don’t already have a quarter of a million pounds in financial assets (besides the value of their home). So we are getting to the point where financial advice will only be available to “High Net Worth” individuals.
That’s not good: not for other individuals who lose the life they could have had, nor for society as a whole - or taxpayers, if you like – because social care costs to cover those unable to afford to pay for themselves are rising to unsustainable levels. And of course there is a knock-on effect of financial impoverishment on the NHS.
We in the pensions industry have a special role to play in solving this problem, because we know something about long-term planning and saving. It’s no accident that two of the three organisations forming MAPS have the word ‘pension’ in their name.
I’m not saying MAPS needs to create or become a gargantuan enterprise on quite the scale of the NHS, nor that we should – or could – pour zillions into its creation. As we all know, the best organisations grow organically, starting with pilot projects and so on. My point is, with debt advice in place, we’re already halfway.
Are we going to stop there? Will MAPS be up for the challenge?
Ian Neale, Director, Aries Insight
