An open letter to IFAs – advice needed on pensions

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I was a self-employed adviser between 1984 and 1995 and know what it’s like to build an advisory business, I made some mistakes, the worst of which was taking too short a view on my relationships with clients.


I hope that you’ll take these comments as constructive and forgive me if I come across as “lording it” but I do think I have a perspective you can learn from.



On my one week induction course (all that was needed pre-A-Day), I was told that I could help a client manage the financial impact of


  1. Dying too soon
  2. Having a long term illness
  3. Living too long.


These simple tenets of life insurance seem to have been put to one side.


Managing auto-enrolment compliance, salary sacrifice and flexible benefits are worthwhile corporate services but they are only the hors d’ouevre, what about the main course?


When I hear advisers say “we’re provider agnostic”, I begin to worry. If the choice of provider was important before RDR -what’s changed? If the answer’s “commission”, then there is a problem.


I was taught that helping people with the problem of “living too long” was about saving and not spending. I was taught to help people understand what they needed in later life and spend on tomorrow not today. My job was to help them invest their savings wisely and understand how to spend those savings sensibly.


But many IFAs I talk to today have all but given up on the financial education of ordinary working people. They’ve become “advice agnostic” and don’t give two hoots about take up rates ,voluntary contributions and the investment decisions of the workforce (unless of course they are wealthy enough to invest on the adviser’s platform).


Since the point of employers having employee benefit programmes is to help people manage later life, sickness and death, abdicating interest in the workplace pension and the financial welfare of the workforce is short-sighted – these advisers are cutting themselves off from the good work that should follow in 2015.


The New Annuity Framework (the Treasury’s phrase for what will go on after 2015), will deliver huge amounts into the investment markets. How and when this money is invested and spent is very much the business of advisers. IFAs are best placed to help ordinary workers with their life savings.


But already we see signs that IFAs may be excluded from the main event. Steve Webb has suggested that the Government intends for the default solutions for the average person “should not be retail”. Listen closely to what is being said to employers and by employers and they are sceptical of the value IFAs will bring at retirement.


The scepticism is easy to understand. The apathy to pensions and financial education now shown by advisers, coming so soon after the selling frenzy of 2012 confuses employers. Trust is being lost and it won’t come back overnight. There is plenty of competition for the “at retirement” wealth, not least from providers who are rolling out non-advised solutions week by week


IFAs need to be advising on more than the infrastructure of auto-enrolment. They need to be involved in advising employers and staff on savings and investment and they need to help employers establish or re-establish the right workplace pension.


Not to do so is short-sighted and will lead, as I found out 20 years ago, to missing opportunities later.



This article first appeared at

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to An open letter to IFAs – advice needed on pensions

  1. Hi Henry,

    Interesting article….and you’re insights are (as usual) valuable ones.

    However I see the market in a slightly different way. To ensure that automatic enrolment works for the majority of employers IFA’s should be focused on making sure AE is done in the right way.

    Why? Because AE (if done right!) provides an opportunity to influence, build trust and encourage positive savings habits for millions of people at once.

    AE, if administered correctly, will have more of a positive impact than years of conventional financial education ever could (and has)….all we need to do is take a look at other parts of the globe where this particular ‘nudge’ has been implemented.

    Once people are invested and engaged into savings (via the nudge) we can then start to educate and inform….but I’d suggest that this is a longer term piece of work. I agree that we need to keep an eye on this as a profession but the foundations of this work is ensuring that AE is correctly administered.

    I’m not suggesting supporting employees with the right financial decisions and employers with selecting the right scheme isn’t important….You’re right…it is fundamental.

    However without the foundations of decent corporate governance and compliance in the market (which by it’s nature a body of work for many AE specialist which will last until 2016/2017) doing all the “good stuff” will get very messy very quick.

    Whilst both the AE compliance and individual advice can be done together the IFA proposition needs to be clear to deliver this….and this raises the age old question….who pays for face to face advice, how do they pay for it, and are they prepared to?

    AE compliance is clear….the employer pays. However less employers are prepared to pay for services for their employees advice and I’ve made the decision not to incur the costs either.

    Time will tell who’s right….however I reckon today’s challenge is building strong foundations in this market with as many companies following the rules as possible will provide more longer term benefits than IFA’s who play in both the corporate and personal space with the same client simultaneously.

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