I was entertained and amazed last night listening to Ken Davy talk about the likely impact of pension freedoms. I was saddened too, for Ken’s a man who represents the absolute integrity of advice in this country, and he is not happy.
His theme was mis-selling and he reminded us of the bitterness created between actuaries and financial advisers from the late eighties onwards.
There is a divide between advisers and actuaries that was created then and has still to be bridged. I first met Ken in the offices of the NAPF last year. He had never been into them, I felt I was never out of them. As we were taking Joanne Seagers walked past and we exchanged pleasantries, she looked at Ken and walked away. It remains an image that dwells in my memory and flashes to the front whenever I talk with trustees about advice.
The entrenched positions that have been taken are not helping us to move forward. We have a regulatory regime that has yet to move an inch to accommodate the desire of ordinary people to spend their defined benefits in their undefined way.
Understanding the objectives of ordinary people is simply not on the agenda of the FCA when it comes to the “guaranteed” benefits offered by occupational schemes. It remains the Transfer Value Analysis that governs the advisory process, not the wishes of those who are beneficiaries. Indeed, the member and the adviser are not even given access to a key document that should enable proper advice on risk to be given – the trustee’s assessment of the employer’s covenant.
I think Ken Davy a fantastic man, I could have listened to him talk all night (and nearly did). But he is wrong to be bitter, understandable as his bitterness is. Even though the treatment meeted out to advisers and their insurers as a result of mis-selling was disastrous to independent financial advice, even though the restitution process was hopelessly unfair and allowed all kinds of arbitrage against adviser, we have to move on.
Trustees do not have it in for advisers nor should actuaries. I say “should” though I know that many actuaries remain obstinately prejudiced against or blindly ignorant of the value of advisers. Many, like Joanne, simply haven’t engaged and are consequently unwittingly part of the problem.
It is critically important that Ken and his gang and Joanne and her gang meet half way and that they work together to sort out the problems with transfers. While the two sides stay apart, it will be difficult to get the regulatory easements needed for people to make choices about staying or going from their occupational schemes.
You can shake a bottle of pop so hard but eventually the pressure will force the cap off, the resulting mess from pop and cork and broken glass is not what we want. What Mark Hoban calls “financial carnage” will ensue from our failing to bridge the divide.