Is the Money Advice Service working?
MRM’S Jon Atkins weighs up the public and press reaction to the Government’s free Money Advice Service.
Three months since it went live, the Money Advice Service has come in for some stick from advisers over providing direct links to providers from its annuity comparison tables. The service, which is a re-branding of the old Consumer Financial Education Body, gives free, independent financial advice to anyone in the UK online, over the phone and face-to-face through a national network.
Aimed at being complementary to the financial advice industry, MAS claims to provides a simplified, first-step service for people who may never have previously sought financial guidance through an IFA. It also claims to be completely sales-free.
However, general consensus – and highlighted by consultant John Phillips in Citywire this week – is that many people, attracted by the free, unbiased advice adverts on TV, will not read the small print or look any further than the top rate annuity quoted. Annuitants are unlikely to be able to decipher Guaranteed Annuity Rates, let alone decide to take out their Open Market Option, rather than stick with their existing pension provider, whether to go through a provider or a discount broker – all aspects that might need a bit of explaining.
Where does that leave financial advisers? IFA reaction in the press to the service continues to be mixed, with some saying it realistically caters for a large swathe of the population who can’t afford to pay for advice, while others believing it could be an FSA sponsored plan to see the end of the IFA for the mass market.
What is certain is that most advisers will be left to compete in the HNW market for future clients. With fees of around £100-£200 an hour, this is likely to put off all but those with particularly complicated financial affairs. And this is just how most advisers want it, which is where the Money Advice Service comes in.
But is the public clamouring for such a service? You only need to see the apathy that greeted stakeholder pensions in 2001 or even the take-up of the Open Market Option on maturing pensions and you have to question this. Apart from the hand drawn TV ads (have they finished now?), how strongly is the Money Advice Service being marketed? Are people even aware of this service?
What is questionable is whether it is Treating Customers Fairly pointing annuitants towards certain providers. They are not giving advice, they don’t provide whole of market, but are these providers paying for their links being on a Government site? The lines seem a bit blurred.
Jon Atkins is a senior consultant at MRM. Follow him on Twitter.