Why financial education can only go so far….

Snake oil

You know when you have a guilty thought and you can’t share it with anyone. And then, quite by chance, someone repeats that thought back at you – and you feel relieved, ashamed and a little bit angry all at the same time?

Well I felt like that yesterday. I’d been very excited all morning as I was on Money Box, I’d done my bit on the show and was being shown round the BBC building by Paul Lewis’ assistant Janet (with my son and the other guest – Katie Evans of SMF).

Katie and I were talking about how the SMF had had trouble engaging with politicians and how the political agenda was dominated by just one idea – that we could make everyone capable of taking financial decisions for themselves.

And then the penny dropped, this was what had so frustrated me when I’d spoken with Harriet Baldwin earlier in the autumn and this was what I couldn’t understand about pulling the defined ambition project.

I realised what had been blindingly obvious to me – but I just couldn’t accept, that  financial empowerment can become an ideological cul-de-sac.



It’s such heresy, especially in a firm such as ours , where making people more engaged, and better educated is considered the sine qua non of “financial empowerment”. But it’s not. It’s an evangelical thing -this personal empowerment agenda – and it’s got a lot of people under its spell.

These include our Chief Economic Secretary and City Minister  who is (to quote Shirley Valentine) “loop the friggin’ loop” in love with making us all our own pension managers.

But I’d been sitting in the studio only a few minutes earlier, listening to Talk Talk customers being sweet talked into handing over the control of their bank accounts to plausible crooks teaching them about internet security! And I’d been listening half in awe and half in horror as I realised that the methods we use to engage and educate are precisely the methods that these fraudsters were using.


Indeed, once you have scared someone enough, you can get people to do whatever you like!

Here’s a mail I received last week from an accountancy network

late yesterday, I… received notification that six people had been arrested in relation to auto enrolment fraud allegations. I attach a copy of that article

Whilst we are unlikely to know the facts for some period of time, there is one clear message there are criminal implications in relation to non-compliance on auto enrolment. 

I don’t know the name of the business concerned but it will be the client of some accountant somewhere in the UK. In all probability, the accountant was not even aware of the potential issues. In a sense, it doesn’t matter who it is because that someone could be you.

A lot of accountants are opting NOT to get involved in auto enrolment because there is a lot of work for no apparent return. I understand that.

However, just consider this one issue – what if the individuals above had not been arrested yesterday and that the business concerned had their accounts prepared by their accountant, accounts were signed off without any adverse issues being raised regarding compliance with regulations and then at a later date, the individuals concerned were arrested?

Let’s be clear, like or not, there is an implication for every single accountant, for every single client that has employees and in every single accounting period after the auto enrolment staging date.

You have to consider whether or not the client’s chosen solution is compliant – again, whether you like it or not.

If you let your client choose their own solution or simply pass on the responsibility to a financial adviser, you’ve still got the same compliance responsibility. The more and varied solutions that clients use, the more problems you’re going to have.

There is only one way to minimise that risk – that is to TAKE CONTROL and offer the same solution to all your clients – a solution which addresses the key risks …

You have to start with the risks!

Like you, I probably receive 10 emails a week regarding auto enrolment and offering this to my clients. The message is all about income and opportunities to you in your practice. I’ve not yet had any email that talks about, let alone addresses, risk – risk to client of non-compliance and more importantly, risk to you. 

I’m a chartered accountant and proud of it. I passionately believe in what we do and what we have to offer to our business clients. I always want to deliver positive messages and solutions to my clients. However, compliance with regulations is not a choice. It’s legal responsibility and this one is not going to go away.


An action is required by you. Positive action. Positive action to help your clients. 

I’ll be writing to you again in the next couple of weeks to outline the actions we are taking and the positive role that you can play.

 However, you can do something about this now, and that’s to trust our ae solution…


Whether it’s the scammers relieving Talk Talk customers of their money, or accountants scaring the living daylight out of each other over auto-enrolment, the techniques are the same


And it’s that same evangelical tone that runs through all of this – and is there in the utterances of Government when they talk about the Financial Advice Market Review. Whether for good reasons (and I actually believe that the accountants do believe in their “ae solution” and that Harriet believes we can robo-advise the nation into good financial behaviours) – or for bad, there has to be a balance in this debate.

There are many people who will not get all this sophisticated financial stuff and will do whatever they are told. If we allow proselytizing from the evangelists of self-empowerment to go unchecked, we will be opening the castle gates not just to the good but the bad.

We need fiduciary care, strong Government and good products

Financial education , whether in the workplace or on the PC or tablet or smartphone is not enough.

People can be taught bad behaviours as well as good and people can believe they are being clever when they are being very stupid.

My biggest worry about what Harriet and the FAMR are up to, is not what they are saying – which is right, but what they’re not saying. In the headlong rush to get more advice to more people, they are forgetting the fundamental need for Regulation and Governance of the financial instruments people use to sort their finances out.

My Eureka moment

In my brief conversation with Katie Evans, somewhere in Broadcasting House, the penny dropped. I’m not against La Baldwin, but she scares me. I’m not against evangelists, but they scare me. I’m for balance and proper regulation and I don’t see much balance in the debate on advice and guidance, at least as it’s being presented to us at the moment.

You are much better off listening to the excellent episode of Money Box that Paul Lewis presented yesterday. Roll up…Roll up!

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 Why financial education can only go so far….

  1. henry tapper says:

    If you want to hear more about the Wise Men – listen to me and Katie Evans on Paul Lewis’ Moneybox at 18 minutes 25 seconds via this link http://www.bbc.co.uk/programmes/b06nhpxq

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