Buying an Annuity - Level or increasing- which?

Andy_L

I suspect that's a typo. I'm guessing he ment seventy-something

MikeJones_2

Hi jamesd,

I don't want to dilute this thread, but I thought I would respond to your post about the opinion/advice issue.

I acknowledge what you are saying. The problem with opinions is that they are very often perceived to be advice and that is the big danger. I reiterate my previous point that an opinion is subjective – it is not a fact – and great care should be made in making that point.

Putting a statement within a profile or contained within a signature is all very well, but I suspect that the majority of lay people would struggle to understand the implications of when an opinion is not advice. In fact, in my experience, some advisers have struggled with this too.

So, what is regulated advice?
I agree with your definition of regulated advice which concurs with:
The Financial Services and Markets Act 2000 (FSMA) requires the FSA to authorise advisers if they recommend buying, surrendering or changing a specific financial product from a specific provider. (Source: Thoresen Review of generic financial advice: final report - March 2008).

So, other than not naming a provider, how much more specific could EdInvestors comment have been (i.e. do you agree that 'a level annuity' is a specific product)?

EdInvestor wrote: »

Index linked annuities are very poor value, go with a level I]sic:annuity[/I (if you are not eligible for an enhanced/impaired life product ) and save the extra separately if worried about inflation.

You commented that:

jamesd wrote: »

Regulated advice, meaning a professional exercising their professional skills as they would in their normal line of regulated activity, is what is prohibited.

In its simplest terms, the FSA Website (Getting Financial Advice) says: Financial advice is when someone has studied your personal circumstances, and assesses and recommends financial products that are suitable for you. Ironically, the word advice does not appear as a glossary definition in the full FSA handbook, merely adding to the confusion!

EdInvestor had very little information to hand in the original post – which is precisely the point I was trying to make – highlighting the danger of proffering an opinion without all of the relevant facts.

Most people know that advisers must be regulated. By the fact that advisers must be regulated, means you can extrapolate that it is advice itself that is regulated (albeit a specific financial product/provider to make it a regulated activity) although as far as I know not this has not yet been tested in law. So, the act of being a regulated adviser is a product of the regulatory regime.

Applying the logic:
Advice is subjective and is not a fact.
An opinion is subject and is not a fact.

Therefore: an opinion = advice.

jamesd wrote: »

… while we are all free to give opinions and general guidance…

Guidance is good (if it is factual) and it is guidance that I respectfully suggest that this forum was probably looking to strive towards when launched.

jamesd wrote: »

One ironic consequence of this is that ignorant consumers have more freedom to comment than highly skilled professionals.

I don’t agree, given my comments above, as everyone is subject to the same rule of law.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser.

jamesd

ATF101, sorry, that age should have been 75, not 7. It's likely to be higher by the time you reach it.

jamesd

MikeJones, thanks for giving your sources, that makes this discussion much more fruitful. Easy part first.

MikeJones wrote: »

So, other than not naming a provider, how much more specific could EdInvestors comment have been (i.e. do you agree that 'a level annuity' is a specific product)?

"level annuity" is clearly not a specific product. It's not even a specific provider but is instead a general class of product.

You'd have a much better case if EdInvestor had written something more like "We've discussed your whole specific individual financial and personal situation and needs in detail. As a result I advise you to purchase from me the ABC Level Annuity product of XYZ Insurance". This could pass the four point test for being the provision of regulated financial advice.

Now, on to what is regulated advice, which is what is meant by the casual use of the word advice with regard to what can be done here.

"4.10 Deciding whether a person giving advice must be authorised by the FSA is determined by applying four tests:
• Is the provision of advice carried on in the UK?
• Is the advice given by way of business?
• Does the advice relate to a specified investment?
• Does the advice relate to a specified activity?
4.11 All four tests must be met to require FSA authorisation.."

Source: Annex 4 of the Thoresen Review of Generic Financial Advice: final report - March 2008, Annex 4, which gives the four tests required to determine whether the advice being given is an activity regulated by the FSA and also discusses how there is significant ambiguity in this area.

For anyone interested in this topic I recommend reading the full appendix, which is discussing the possibility of providing a funded generic financial advice service and whether it would need to be regulated in some areas or not.

The Money Made Clear page you referenced contains the same key criteria "Financial advice is when someone has studied your personal circumstances, and assesses and recommends financial products that are suitable for you. Firms that give financial advice have to be regulated by us, or be the agent of a regulated firm."

Those go to the heart of my point: EdInvestor and I are less restricted than dunstonh and perhaps you because we are not operating as firms and hence are not subject to FSA regulation because we are not giving regulated advice.

The rule of law seems reasonably clear for our context here, though highly imprecise and with unclear borders, as the report notes, but different from that which you appear to be advocating.

For practical purposes, the description that I gave earlier is a reasonable approximation of the one that applies here, with firms prohibited from making financial promotions and regulated individuals somewhat restricted in what they may do because of the requirements that their regulator imposes upon them.

There is also a meta-guideline reflected in the site's tag line: "Consumer revenge".

If you have further thoughts on what is or is not acceptable here, I recommend that you use the abuse contact email address to seek further information on what this site accepts and why.

jamesd

MikeJones, you might also want to look at the articles on the main site and note that our host is a journalist, not a regulated individual, but is giving considerable amounts of quite specific information, including suggesting investigating specific products.

You may wish to consider whether our host has or has not determined whether he's committing the crime of giving regulated financial advice without authorisation and consider also whether you are in effect suggesting that he, as well as EdInvestor and I, are engaging in a criminal activity.

If that is your view, please discuss it privately with him, lest you defame him via public discussion.

EdInvestor

Of course this issue has come up several times before.Martin has fully investigated it and the site policy is stated here:

http://forums.moneysavingexpert.com/showthread.html?t=304878

MikeJones_2

jamesd wrote: »

...giving considerable amounts of quite specific information....

Information and education is a key factor to helping people understand strengths and weaknesses in their financial affairs.

jamesd wrote: »

...including suggesting investigating specific products.

Sensible guidance then.

jamesd wrote: »

...and consider also whether you are in effect suggesting that he, as well as EdInvestor and I, are engaging in a criminal activity..

As I said before, I acknowledge what you are saying. The problem with opinions is that they are very often perceived to be advice and that is the big danger. I reiterate my previous point that an opinion is subjective – it is not a fact – and great care should be made in making that point. What's the problem with that?

jamesd wrote: »

...If that is your view, please discuss it privately with him, lest you defame him via public discussion.

" Pls be nice to all MoneySavers. There's no such thing as a stupid question, and even if you disagree courtesy helps."

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser.

jamesd

MikeJones, you shot yourself in the foot at least twice so far in this discussion. Best to note that there are people here who will do the background research work and ensure that your points will survive such research. Beats repeating the experience.

I do agree that at times people here can make quite abbreviated suggestions that merit expansion and clarification by others. Hence my own expansion of EdInvestors suggestion that gave some of the background and other possibilities to consider. That's a good approximation of the ideal way to handle such things and I've noticed you doing an excellent job of it in some discussions.

Between us, with such clarifications and sometimes disagreements, we end up collectively presenting a reasonably rounded picture of the options and criteria that may be of interest in making a product choice.

MikeJones_2

jamesd wrote: »

...you shot yourself in the foot at least twice so far in this discussion...

I don't agree with you on this. I made (and stick to) my point that expressing an opinion is advice and that it is people's perception of that as advice that I believe should be the cause of concern (and hence the mudied waters that the public has to deal with in terms of advice and regulated advice - as both you and I have teased out through this interesting debate).

jamesd wrote: »

...and ensure that your points will survive such research. Beats repeating the experience...

I don't understand your point. But am happy to move on.

jamesd wrote: »

...I do agree that at times people here can make quite abbreviated suggestions that merit expansion and clarification by others...

That's the crux of the problem of many of the posts.

jamesd wrote: »

...I've noticed you doing an excellent job of it in some discussions...

Thanks for the compliment which I reciprocate.

jamesd wrote: »

...Between us, with such clarifications and sometimes disagreements, we end up collectively presenting a reasonably rounded picture of the options and criteria that may be of interest in making a product choice.

Agreed.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser.

EdInvestor

MikeJones wrote: »

....expressing an opinion is advice ...

People may think a mix of information and opinion adds up to 'advice' in the general sense, but there is a big difference between that kind of informal advice and the specific meaning of regulated "advice".

If you receive regulated "advice" , procedures will be gone through and you will be able to make an official complaint for redress if the advice was unsuitable and led to you making losses. You pay for this regulated advice of course.

No such regulated paid for "advice" with inbuilt protection is given on this forum by anyone including regulated persons who may contribute.This is a free and anonymous site..

I'd have thought most posters realise that.

BTW if regulated persons don't wish to be hamstrung by the rules they can always sign onto the forum as an ordinary contributor.There is no requirement for regulated persons to identify themselves as such.