Standard Life gave a briefing this week about its platform plans at its wee offices in the Gherkin in the City of London. The Money Debate attended. Among other things, it has announced a D to C platform which made a few headlines this afternoon. This has traditionally been a tricky move for insurers with IFAs worrying about losing clients to a business partner which is also a rival. Standard may have come up with the perfect way to sugar the pill. Certainly from what it said this week, it will harness its asset gathering operation through things such as auto-enrolment, try and use that to encourage other investing, and when customers have enough assets to need advice they plan to refer them on to advisers who use the platform.There will be some details to be thrashed out of course. No doubt Standard will want to ensure the advisers it refers business to, don’t suddenly shift the assets to Transact ..read more
Latest articles on The Money Debate
Is the burden shifting from consumers on non-disclosure?
June 10th, 2013The Financial Conduct Authority’s first quarterly consultation paper is making some small adjustments to the language around consumer disclosure when they take out insurance. The FCA says this is actually bringing ICOB into line with the Consumer Insurance Act 2012. The regulator says it is also bringing its policy into line with FOS and what is established as industry good practice.
But this feels like a shift, albeit a relatively subtle one. This is one key paragraph. ‘The Act replaces the duty on the consumer to volunteer information material to the insurer’s decision with a duty to take reasonable care not to make a misrepresentation during pre-contract negotiations.”
Here is another section – “Whether or not a consumer has taken reasonable care not to make a misrepresentation is to be determined in the light of all relevant circumstance. For example, the type of consumer insurance contract in question and its target market, any relevant explanatory material or publicity produced or authorised by ..read more
Sorry Mr Jones but clean share prices are surely only the fourth or fifth most important thing for investors
June 4th, 2013Yesterday the Money Debate received a little press release from Edward Jones which says that clean pricing is probably the most prominent issue in retail fund provision and the hottest topic for retail clients.
Okay, it does says probably, but surely the most important thing happening to investors is what is happening to markets. Perhaps nobody knows, what to do about their bond market exposure if returns look certain to be negative, whether they are diversified adequately including considering that bond issue again, whether their attitude to risk matches what they think they are investing in and, er, well, maybe then clean share classes and transparency.
Still one must say it is fascinating to watch stock brokers make a huge play for the fund market with a very different ways of pricing. There will certainly be a bit of price war. That is great news for the execution only, bargain-hunting veteran investor. However the Money Debate still wonders what it means for ..read more
Wrong advice on signing away employment rights
April 26th, 2013It was a little strange this week that the Government got through its beazer scheme to encourage employees to sign away employment rights in return for CGT free shares in their employers as the Guardian reported.
It looks like the concession which got the plans through Parliament was a promise that the employees concerned would have access to free, independent legal advice.
Not being a lawyer, I still wonder what this legal advice would be. Like this – the law says you can do this. (Well unless there is a constitutional clash with other laws, in which case employees will need to seek the advice of the Supreme Court.)
Surely it should have been financial advice. As in… Well it is quite difficult to put a value on those employment and redundancy rights, but they certainly have some value in protecting your income a little.
This is compared with a shareholding in your firm which does, to an extent, double up your potential liability. ..read more
Does Hargreaves Lansdown’s success mask a UK Isa crisis?
April 30th, 2013Hargreaves Lansdown’s boss Ian Gorham gave a presentation to journalists this morning with two fairly big pieces of news (covered here by me) for Mindful Money. The first was an announcement that HL is working on bringing down the minimum investment at which it will offer advice from about £50,000 to £20,000 and the second that Gorham wants a cap put on the charges that insurers can levy on transfers saying 6 per cent of a portfolio is phenomenally high. And so it is.
Both are big news of course especially the reduced minimum which could be a game changer. If HL can make it work maybe others can too. It is certainly the first time I have heard that the advice gap might just have narrowed a little. It seems to be driven by the fact that some people simply won’t self select.
The second issue on transfers is very interesting too. HL may be the biggest consumer platform, but platforms ..read more
Simplified advice call isn’t self serving from Tory peers
May 1st, 2013When Lord Flight talks about simplified advice he is genuine in trying to find ways to convince more people to save and invest. Some advisers on the comment boards see some sort of pro-bank plot, maybe with the Money Advice Service involved, but I really doubt that. Whether simplified advice would be offered through the banks or even through insurers or platforms or tacked on to an IFA, it is surely a reasonable goal to work towards. We certainly don’t want to see some sort of ‘reprieve’ from the RDR so that banks and insurers can rehire all their old sales forces. In fact, any suggestion that the RDR would allow something called primary advice without ombudsman recourse was dropped years ago. But surely it is possible to devise a very simple suite for those simplified advisers to sell. It would require some disclaimers and possibly something close to a basic approved kitemarked list with FCA approval or at least ..read more
Is there enough ‘advice infrastructure’ to deal with interest only problem?
May 3rd, 2013Ernst & Young is predicting there will be 20,000 advisers by the end of this year down by another 3,000 from the current 23,000. This does not include the bank sales advice retreat. It is only a prediction but it should be in the right ball park.
1.3 million interest-only mortgage borrowers may be facing a shortfall when they come to pay off the capital sum.The average gap may be around £70,000.
Now the interest only mortgage issue isn’t a scandal nor even a crisis yet. But it is a big concern particularly in parts of the North where prices have fallen a lot and property downsizing options are very limited.
All things being equal, one might suggest the best way to deal with this would be to direct as many of these borrowers to proper advisers. Unbiased.co.uk is doing valiant work to do just that. But will there be enough advisers? Twenty thousand advisers – makes about 65 shortfall sufferers for each ..read more
If our system of advice can’t help with interest-only shortfalls then what is it for?
May 8th, 2013This blog has occasionally raised concerns that the post-RDR advice sector could become increasingly irrelevant in public debates as it retreats to advising Upper Middle Britain.
Is there now a chance it could become irrelevant for something that is much more than a debate but also a public advice challenge – the interest only mortgages shortfalls facing 1.3 million borrowers. It is certainly a significant litmus test.
Of course, the issue can be overblown. While there is not necessarily a need to panic, there is a need for advice. But any consideration of the various options – moving to repayment, creating a savings and investment plan, down-sizing – would be better done with financial advice than without.
However the dynamics of the market may not lend themselves to allowing advisers to do much about it. In a world with more flexible regulations, advisers might set up bespoke workshops to help people consider their options. With more flexible regulations, mutual funds or even structured ..read more
