Responding to the Treasury / FCA Discussion Paper on the Advice Guidance Boundary Review (which closes today), Aegon has put its backing behind targeted support as the intervention most likely to make a dent in the current advice gap. It has challenged the Government and regulator to ‘be brave and bold’ with its changes rather than erring too far on the side of caution, setting out five fundamentals for the success of targeted support.
Steven Cameron, Pensions Director at Aegon said: “The Advice Guidance Boundary Review offers a real opportunity for progress in closing the highly persistent advice gap. A triple whammy made up of difficult economic conditions, people living longer and individuals having to take on more personal financial responsibility means regulated advice has never been so valuable and must be encouraged to thrive. But millions of individuals are stuck between the ‘rock’ of holistic advice with a substantive price tag and the ‘hard place’ of generic information which doesn’t encourage engagement.
“We see the standout proposal as targeted support, which could have game changing potential. The ability to offer suggestions for ‘people like you’ could turn the current cliff edge between information and holistic advice into the continuum of support the Discussion Paper seeks. But for this to succeed, adviser firms must be allowed to offer targeted support, not just manufacturers as the Discussion Paper suggested.
“Regarding the other proposals, further clarity of the current advice / guidance boundary is unlikely to move the dial, although some FCA-approved template letters to aid clients with excess cash holdings or on retirement options might be beneficial.
“Similarly, we could see a modest increase in the use of simplified advice if the FCA worked with firms to identify examples of narrower customer needs which could be met commercially through this route.
“For targeted support to be truly game-changing, the FCA and Treasury need to be brave and bold. This middle ground support will never offer the optimal personalised solutions of holistic advice. But it could be a big improvement for the millions who currently get no – or no tailored - support whatsoever.”
Aegon has set out five fundamentals it sees as critical to the success of targeted support:
Focus on core consumer needs including ISAs, pensions and protection, and excluding complex or risky areas
Made available from adviser firms and benefit consultants – we strongly disagree with the suggestion of restricting it to manufacturers
Offered to help customers make the best use of existing products, as well as suggesting possible new purchases designed to deliver good outcomes
Offered proactively, rather than only when requested by consumers who very often don’t know what support they need, when
Accompanied by simple disclosures to explain the service and how it compares with advice and other forms of support
Steven Cameron continues: “We hope that the FCA and whoever is in Government later this year will continue to prioritise closing the advice gap. An industry which can truly support millions of savers and investors improve their personal finances will be good not just for those individuals but for the whole UK economy.”
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