MSE News: Government to examine access to financial advice

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A major review to improve consumers' access to financial advice has been announced by the Government...

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Government to examine access to financial advice




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bexster1975

It is not in governments interests for the hoi polloi to be savvy with their cash. It would certainly put the cat amongst the pigeons at HM Treasury if everyone could afford to pay for " tax advice" from MPs accountants!

Bexster

Archi_Bald

Not sure what you mean. It is in any democratic government's interest to have educated and well informed citizens and residents. Keeping people in the dark just leads to additional costs, an unhappy society and possibly to riots.

As far as money goes, it is a total disgrace how much money people leave lingering in low-interest savings accounts. It is also a total disgrace how many people don't seem to know how to go about making provision for their old age. And not to talk about people getting into ever deeper trouble because they don't understand what interest does to their debts. Those are just some examples where both, the people and the state would benefit greatly from people being more informed and educated.

I doubt access to financial advice alone will do the trick. The basic pre-requisite is financial education, which this site has long campaigned for, and to which it contributes. But better access to financial advice should certainly help, if people will make use of it.

msallen

Agree Archi, but one more pre-requisite is a decent basic level of numeracy. We've all seen the inane questions on here along the lines of "whats 3% of £100".

For too long society has upheld a dangerous meme about maths being too hard, and it being perfectly acceptable to slag it off as a school subject, when the same is not accepted for other subjects. I suspect we have (and have had for generations) far too high a proportion of arts/humanities graduates in government and not enough science ones.

jimjames

Definitely good idea to increase access to advice as it seems IFAs are limited to those with funds of around £50-100k and most banks are withdrawing from the market but would be equally good to improve financial education.


Shocking how many have no understanding of risk thinking that stock market investments are too risky yet are happy to throw £2 away on the lottery or keep thousands in cash for decades.

bexster1975

I'm afraid Archi the UK you describe already exists. If people use money wisely, HM Tresury get less tax revenue. All their big business tycoon mates/bankers make less money as people don't make foolish financial decisions.

I'm afraid an educated society would have called out MPs of all parties for what they are long before now. It is globally true that governments don't want a majority of the populous to be well educated - UK is no different.

Bexster

bexster1975

And I must say I don't think the degree subject of MPs is where the greatest issue with them lies.

I would pose the question, if I'm wrong then why is no appropriate financial education widely available in schools/ society in general? Also, how can the government defend not outlawing payday lenders and their like?
I'm sorry but the overwhelming evidence is that no government in my lifetime has wanted to assist the public in managing money sensibly and living within their means.

Bexster

eskbanker

bexster1975 wrote: »

If people use money wisely, HM Tresury get less tax revenue.

Not in all circumstances - as someone (colsten?) has pointed out on this site within the last few days, if people use taxable current accounts for saving instead of blindly following the mantra of cash ISAs being best, then both the saver and HMG win!

dunstonh

The FCA expect reviews to have a structure. i.e. for paying that you get this that and the other. However, for smaller investors or those with lower net worth, they dont have any need for those structured events. They generally are looking for updates, comfort chats and having the adviser available when needed and as a sounding board. That option is not one that any compliance company that I am aware of have said is allowed by the FCA.

The FCA dont like retainers either. So, you cant have a small retainer for these people. Even though it would create an ideal cross subsidy model which would allow lower net worth individuals to be catered for again.

I wonder if the timescale has got anything to do with the sunset clause hitting in April 2016. That is the point advisers will no longer be paid trail. Whilst larger investors would likely have moved to unbundled basis long ago, those smaller investors are probably still getting service when they need it without being explicitly charged. However, come April 2016 when trail is turned off, if the person doesnt have enough to move to a fee model then the servicing ends.

i am about to tell one of my advisers to dump just under 50 clients. The majority he has dealt with for 30 years. He knows them inside out and they know him. They value him. However, it is not cost effective to meet the regulatory requirements of a structured review process for them. It was on the old pre RDR model as you didnt need around 100 documents on file to prove you had done the review.

bexster1975

Thank you eskbanker. However this is a very specific example and doubt this would make up the tax revenue lost from mindless consumerism, buying carp people can't afford on credit, payday lending due to lack of budgeting etc etc.

Bexster

jimjames

bexster1975 wrote: »

Thank you eskbanker. However this is a very specific example and doubt this would make up the tax revenue lost from mindless consumerism, buying carp people can't afford on credit, payday lending due to lack of budgeting etc etc.

Bexster

But improved pension savings and generally increased emergency funds would reduce reliance on credit, payday lending etc. That would benefit the government with reduced spending on welfare if not increased tax take.