Tim Sargisson: Confucius had it right on financial advice
Thanks to the considerable efforts of the winners, there was plenty of good news arising from the recent Professional Adviser Awards but, says Tim Sargisson, very little of it will escape the bubble advisers occupy
‘The superior man understands what is right, the inferior man understands what will sell.’
Maybe I’m alone in attending an awards evening, scanning the room and thinking about Confucius. I don’t make a habit of it but Confucius’s words came to me at the recent Professional Adviser Awards evening. An event made especially enjoyable if you landed a trophy – in Sandringham’s case, one of 12 companies elected as the 2018 cohort of Best Financial Adviser to Work For.
Back to Confucius – and the winners on the night clearly understanding what is right by being able to evidence their knowledge, skills and commitment to client care. As PA editor Julian Marr said, they clearly took “a lot of time and care to address both the issues in a case study, and our own probing questions on their businesses’ numbers and risk management processes”.
Unfortunately, very little of this good news will escape the bubble we occupy. Financial services awards are unlikely ever to be televised on mainstream TV, at peak viewing times in the same way as, say, The Baftas or The British Soap Awards. So, the people who matter, the public, will be left ignorant of the great work that goes on in many firms to help and support them to achieve their financial goals – firms like Adviser of the Year, Harpsden Wealth Management.
Instead, the public are routinely exposed to the inferior man in our industry, who understands only what will sell. The papers and media in general are still awash with stories concerning the British Steel and the tsunami of bad advice that has washed over so many people.
Most of what Frank Field and the Work and Pensions Committee have said and keep saying is eminently sensible, while skewering the FCA into the bargain. Their report, published on 15 February, saying “another major mis-selling scandal is already erupting” on defined benefit pension transfers, hit the spot in so many areas.
I suspect very few of us who attended the PA Awards on 8 February are in the least bit surprised about how the British Steel and the transfer debacle has played out. We understood the situation at British Steel and the changes to its DB scheme would create a toxic environment where British Steel Pension Scheme members would be exploited for cynical personal gain by dubious financial advisers in tandem with parasitical so-called introducers. If we understood what was likely to happen, why are the people who really matter in this so slow to respond?
The Daily Telegraph recently carried a story saying Britain’s biggest pension firms were planning to discourage customers from taking advantage of pension freedom due to concerns over reckless spending, and with the FCA this spring expected to force firms to introduce new risk warnings to prevent savers from running out of money.
With more than a million pension pots accessed, half of which have been emptied entirely and nearly £16bn been cashed out in total, maybe it is a case of ‘too little, too late’.
The real tragedy
Surely the real tragedy, however, would be if, as an industry, we did not try and work together while understanding the challenges pension freedom presented and thereby address a paradigm shift following George Osborne’s announcement. There has been no joined-up thinking, which has resulted in a scattergun solution to those seeking advice and which we have seen, on occasion, is not fit-for-purpose for the public at large.
The recommended ban on contingent charging – seen by the Work and Pensions Committee as a key driver of poor advice – is clearly sensible and already the response by some is to seek to justify contingent charging. Being independent takes many forms and, as the committee said: “Genuine independence is not compatible with a charging model that only rewards advisers for recommending a particular course of action.”
Published on 20th February 2018