A single guidance service


The simple idea of merging the functions of The Pension Advisory Service, Money Advice Service and Pensions Wise under a single “Guidance” banner makes a lot of sense. It acknowledges that the current situation is working too well and supposes that a reorganised super-service could do a lot better.

Earlier this year, the DWP released its Christian Ronaldo, Charles Counsell from auto-enrolment duties to take over at the Money Advice Service.


Charles Counsell


Charles is an organiser, someone who gets things done very well, he has done a great job (and got a gong) for fixing auto-enrolment, now he looks set to do the same with guidance.

Charles’ masculine virtues as a fixer are complimented by TPAS’ Michelle Cracknell, who has transformed TPAS on next to no budget through a different intelligence. If Counsell is Ronaldo, she is the instinctively brilliant Messi!

In many ways this should compliment Counsell’s , the fear is there may only be one space at the top.

How and who the re-organisation of guidance is achieved, we will find out over the next twelve months, but I am comfortable that with Counsell and Cracknell at the helm, this will happen and that we will see a new simple service that the public will use.

How will it be used?

The current approach is reactive. Guidance is given to people at the point when retirement becomes real, when they have to start taking decisions on accumulated savings and pension rights.

At the Great Pension Transfer Debate, Cracknell told the audience her vision was that good savings practice needed to be instilled in the young and that they could educate their parents. It’s an interesting thought and one I have never heard articulated in that way.

Actually, by the time you get to Pensions Wise, you are either financially self-sufficient, in which case you turn to the Government for validation, or you are needing to be told what to do. MAS, TPAS, CAB and Pensions Wise cannot tell you what to do, they can only sign-post you to someone who can. The “someone who can” generally needs paying for carrying the responsibility of delivering a definitive course of action.

The new service, if it is to work is going to have confidence in the advisory process and financial advisers are going to have confidence in the new service.

In my opinion, there is a lack of confidence either way which is what Counsell and Cracknell are going to have to fix.

Guidance and Advice

I am a firm believer in getting people to understand the difference between the two. Guidance is about empowering people to take a decision for themselves and advice is about taking the decision for them. You should not pay for guidance, it is free, it is on the internet, the Government can stick some people on phones and web-chat but they are really only improving on the web-based service.

Advice is something different, it is as different as sitting with a priest in a confessional compared to listening to a sermon.

If we see no value in advice , it is either because we are self-sufficient or because we have no trust in the “confessional” process of financial planning or of its sister “wealth management”.

I think a critical function of a guidance service is to establish in the minds of those using it whether they see value in advice, and if they do, how and where to get it.

Making progress?

The Retail Distribution Review cleansed the advisory process by reducing advisor numbers and focussing minds on financial planning rather than the sale of financial products. We now have less advisors who are better qualified to give advice.

What we have is progress. What we don’t have is a public that is educated to look after itself. The talks on behaviour, most notably from Michelle Cracknell and Greg Davies pointed to our instinctive bias’ towards lazy decisions.

A current example is a survey by AJ Bell, published yesterday. It  shows  that 50 per cent of advisers conducting DB transfers are getting clients to pay for them by paying a percentage of the transfer value. This means advisers only receive payment if the transfer goes ahead (into their “wealth solution).

This is a case (IMO) of the RDR taking one step forward , and (half) the advisory community taking two steps back. The argument for this kind of product driven advice is made on this blog by one of its major proponents.

IMO the arguments for contingent charging are “recidivist”. -advocating  the habitual and repeated relapse into bad habits! Behaviourists will point out that water tends to flow downhill, or as Tideway point out “the earth is not flat”.

Progress through leadership

The DB transfer debate we had on Tuesday showed me that there is a genuine wish among a large group of IFAs not to be recidivist. There was little or no appetite in the room to go back to a pre-RDR state of play.

There was considerable support for the triage or segmentation of Pensions Wise customers between those who needed support but could take their own decisions (guidance) and those who needed to outsource decision making (taking advice).

I would call the group who assembled at the DB debate, thought leaders. They were looking for a way to conduct transfer advice safely and to ensure that everyone got enough guidance to feel comfortable in their own skin.

Of course the conference could not deliver such reassurance, it showed that there are large numbers of people who will go to the Government for guidance, find they need advice and end up taking decisions based on the inherent bias’ of the adviser’s charging system.

But there were sufficient numbers of advisers in the room to give me confidence that progress has been made and we will not slide back into pre-RDR days.

In which case, I hope that those who lead the guidance will feel more confidence in those giving the advice. As to whether this works the other way round, I have more concern. Advisers cannot expect the new guidance  to be a “lead-generation service” unless they are prepared to offer advice to all. That means finding ways of offering a simple recommendation at an affordable price (less than £500).

But if the new service can feel that there are advisers who can provide bulk advice to the parts of the market that FAMR is addressing (e.g. the middle market), then guidance and advice can work together to provide something very valuable.

That can only happen if IFAs show considerable leadership and decide between themselves not to relapse into bad habits but to pursue the tough road to professionalism.

Time for IFAs and those delivering guidance to work together.

Now it is time for senior IFAs to show that leadership, that is the best chance we have to make the new guidance service work. Michelle Cracknell and Charles Counsell have a tremendous opportunity to work with IFAs, I hope they will take it.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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7 Responses to A single guidance service

  1. Brian Gannon says:

    For this to happen it needs simplified regulation and simplified rules and simplified paperwork. This then requires professional ethical advice to be delivered by ethical capable advisers. If the simplified regulation then exists this will enable us to charge less. It also requires customers to stop making fraudulent claims of bad advice so that professional ethical advisers are not at risk of paying out for false accusations because they now have less documentary evidence of their advice. And the presumption needs to be that advisers and clients have an equal responsibility to arrive at the right decision. At the moment regulation seems to me to be based on two false premises:
    I) that all clients know nothing and
    Ii) that advisers will try to take advantage of that ignorance.
    Your suggested outcomes are right. I agree. But practically how do we get there from the current position?

    This is a much deeper question than it appears.

    • Phil Castle says:

      Once again I agree with Henry and also with you on this Brian.
      I worked for Natwest from 1984 until 1996 in 1992 I started as an IFA for them while 93 to 96 I was a tied adviser for NtWest Life. During this time I saw advice chane, with a fact find going from 2 sides of an A4 form, which was mainly name, dob and address, to what we now see as an appropriate fact find. I saw a move from NO suitability report to a carbon copy form, through to a 20 page document, i saw commission discolsure come in and I saw Key Features documents repalce product sales brochures with the former going from one page of A4, back up to a booklet of 20 or more pages. I saw bank chaps payments going from keyed in branch with two senior officers signing EVERY page of what was keyed to on-line banking with no human intervention.
      My point is that we have seen the wheel turn, but costs have not come down becuase we moved from my word is my bond to “if it isn’t written down, it didn’t happen”, that is despite teh fact that a written report can bear NO resembelance to what was said and does not show intent of either party.
      I tried to persuade the FSA (as was) that written suitability reports were not only useless for the blind and illiterate, but were also inappropriate as many consuemrs simply didn’t read them and that recording of ALL client meetings to provide advice evidences that advice given as well as the intent of both parties and can clearly show when someone is “selling” a transfer as oposed to advising.
      I managed to get the FSA to accept recorded Suitability reports, but with some resevrations (I have the copy letter on file) and I got confirmation from the FCA that the position remained the same. Funnilt enough after a decade of doing this, I have had my first ever consumer ask me NOT to record the meeting. I am now in two minds as to whetehr to take her on as a client.
      If consuemrs want cost to come down for advice, we ALL need to be able to work in this way, i.e. do what is RIGHT for the client, with a clear record of why and not wate time producing paper to cover our backsides when what is said and done is what matters to a consumer, not bulls**t is put in a report, which ironically the FOS often see through and uphold complaints on which Brian and I then have to pay for through the FSCS when the firm of wide boys goes put of business.
      It’s funny how the F-pack (as shown above) and CII act as the brake on progress in many cases. The example for the CII is the J07 exam and it’s AF equivalent, AF6, where after I sat J07 for the first time, i pointed out the actual syllabus was at at odds with the learning and examination methods of the exam itslef. they fobbed me off and then 2 years later (after I had passed J07 at the second sitting) the AF6 was changed to the assessment method I had said was more appropriate i.e. assigment based. I passed AF6 2 weeks ago after a year of study and completing the 3 assignments required (the first I had to resubmit as iw was 7% below the pass mark, but I passed the other 2 first time). My point when speaking about Pension Transfers is that like many things in our job, you wouldn’t do a pension transfer case in real life in 3 hours (the examtakes 3 hours), you’d do it over a period of time, collate informaiton, reasearch, sleep on it and only then advise….. and yet, we are measured on what we can do in a 3 hour exam, which we can’t sit again for another 6 months! A VERY stupid system.
      The Army’s range management course was sensibley open book as the last thing they wanted anyone doing was ASSUMING they knew best and deciding on danger areas and practices based on out of date knowledge, they wanted you to KNOW where to look for current info, go look for it, consider it and then apply your knowledge, the course was also practical as you needed to be able to apply it in practice on the raneg and realise your personal limitations (I am red green colour blind so bearing in mind range warning flags are RED, it meant I needed to be extra careful when on a manual range with no wind as I could’t see a flapping flag OR a sliver of red, so I made use of my TEAM to get teh job done properly). The CII and FCA think of us as individuals and don’t recognise we work as teams of specialists with areas of expertise and areas of general practice.

    • Phil Castle says:

      I swould eb interested in what Brian thinks about “The argument for this kind of product driven advice is made on this blog by one of its major proponents.” mentioned in Henry’s Blog. I don’t have transfer permissions and although my locum has the qualifiations, he decied to stop advising on DB transfer and instead to contract that work out to a specialist (as I do). The specialist I use charges fees in 3 stages (I think as I can’t remember the last rtime I needed to refer a consuemr to them). An initial look fee which is just a matter of under £500 I think, a full report and advice fee and then an implementation fee and it is ONLY the latter which is contingent. I don’t like contingent fees and advice for “FREE” when someone can afford it. If they can’t afford teh advice, then I regularly do pro bono work, but that isn’t “FREE”, that is at MY time cost and I make sure consumers know that.
      Advice NOT to transfer is (or should be) as much of a risk to a firm as someone who is advised to transfer and does, so contingent charging for a “don’t transfer” case needs to be paid for as a % of the risk, so the argument in the article is flawed.

      • Brian Gannon says:

        Hi Phil, I cannot really comment on Tideway and their processes in relation to DB transfer advice, as although I have been on their website and read all of their guides, I cannot possibly know how they actually operate face to face. Much of what is written makes sense but it is a question of knowing what drives their business and how they act in practice.

        To answer your question on fees and whether they are best to be contingent or non contingent.

        In an ideal world everyone could afford advice. If that were the case I be paid for my time based on the hours I do. So to be entirely fair I would charge less for an hour’s work on “easy advice” and I would charge more for time spent on complex advice areas requiring specialist skills and application of more difficult concepts. I would also need to factor in the PI insurance risk for different types of advice areas too.

        So given that DB transfer advice requires specialist knowledge, a specialist qualification, and the ability to look at a clients position holistically, and understand the part DB benefits play in the achievement of the clients goals, my hourly rate for Pension transfer work on DB schemes would be a lot higher. Metaphorically its full on accounting advice rather than bookkeeping. Also, the amount of work and application of knowledge required to advise on a potential DB transfer is rather great in terms of hours thinking and analysing and writing. It also requires a lot of discussion and explanation with and to the client to ensure that they understand the choices they face and the implications of different choices, both positive and negative.

        And in the ideal world every person requiring advice would be able to afford it and would value the advice for its “goodness” rather than the outcome of that advice.

        If this were to be true and representative of the real world, then I would charge a nominal initial fee to discuss the transfer at an initial consultation and to build up a broad brush overview of the client’s circumstances. I would then charge a further fee to develop the report and present the findings based on the number of hours worked, taking into account the additional PI risk reaching this stage generates, assuming either the transfer is not recommended or that it is recommended but not implemented(could therefore be a different fee at this stage). I would then charge a further fee for the time taken to implement the transfer if it happens, this would take into account the additional time to implement, and would also include a non-time based fee for the additional PI risk taken on board by recommending and implementing the transfer.

        Clients would then know that they are being charged fairly and everyone is happy that they are charged for the work and that the work is not biased by the fee structure.

        For those who are prepared to operate in the ideal world and who are prepared to adopt the ideal charging structure I am happy to transact advice on this basis, and there are clients who are prepared to do this. That is actually my preferred route too.

        But my real world experience is very different to this. Firstly clients look at the value to them of the advice and the outcome of the advice often drives their perception of value.

        DB transfer advice is different to other forms of advice. With a DC to DC transfer or general investment advice there is already a pot of money there from which to pay our fees, whether that be from a bank account via invoice or via facilitated agreed adviser charge. The fee can be taken from the existing arrangements or from the bank account. With DB transfers there is no transfer pot, it is a future income stream. So it could be that I might need to charge in the region of £3,000 to produce a report advising not to transfer and the client might only have relatively few assets that are liquid. (the total fees for a recommendation to transfer that is implemented could be at least double the £3,000 mentioned and could be substantially more for higher transfer values due to PI risks)Therefore they might genuinely want to get the advice but judge that they cannot afford it. This could mean that clients would choose not to receive advice when if they had then the advice might have been to transfer out.

        In practical terms there are actually quite a lot of people for whom their short to medium term cashflow can be quite weak but where there is a likelihood that the situation may be different at retirement. The DB scheme may be one of several DB schemes, for example someone could have three different DB schemes, and two schemes might provide the guaranteed income required and the third scheme could provide flexibility and choice that would be truly valued and just as importantly actually used flexibly to achieve other aims.

        In the ideal world scenario above then if the person does not have the liquid funds to pay then this simply means they do not take advice if we insist on non-contingent fees.
        It would mean that only those who can afford the non-contingent fees would get advice.

        So therefore pragmatism takes hold in my brain over and above the “ideal world” considerations. So for those who cannot afford to operate in the ideal world (or who choose not to) I make no charge at all for an initial consultation (which can take at least two to three hours) and before committing to the face to face consultation I would often have a telephone conversation to establish the broad bigger picture. Therefore compared to the ideal world fee structure I am already “owed” advice fees. Then I might offer to produce a TVAS report with a broad brush report for a flat fee of somewhere between £750 to £1,500 for someone who cannot afford the full £3,000. So at this stage I am “owed” maybe £2,250. If I did not make this variation we would not get to this stage. If the advice is then to transfer in 100% of cases I could then charge the £2,250 on top of a further fee based on time to implement and additional PI risk. This is because the client could pay for the fees out of the CETV once transferred. Doing it this way probably means that the clients who do transfer end up paying more by going this route than those who choose to pay using my preferred route of hours/PI/expertise costed fees. They understand this.

        So the thing that stops me from advising on unsuitable transfers is morality and ethics. If I give advice to transfer that the regulator subsequently disagrees with to the point that it is not just unclear but unsuitable then that would not be due to a lack of morality it would be due to a disagreement about how to interpret suitability and any transgression would be incompetent rather than immoral.

        My advice is not funded by non-contingent fees 100% nor is it funded by contingent fees 100%. In fact there is no such thing as non-contingent fees if you wish to fairly reflect the risk of PI as part of the fees. You are backing your own ability to understand what is likely to be the level of future successful claims on your PI insurance policy and trying to estimate the amount you should set aside for future claims and the impact on insurance premiums. There is no entirely fair way to charge. You can pick holes in any method. If you could find a single way to pay for advice that was unconditionally right it would exist as the sole method of payment. Good advice is delivered by good advisers. Bad advice is delivered by nice but unconsciously incompetent advisers or nasty bastards.

        I would use me to take advice and I would trust myself to give appropriate advice to my mum and dad, and also to my worst enemy.

        I was at the great Pension Transfer debate at Peterborough and I have to say I find the people who say they want Financial Advice to be a profession to have the wrong idea. I don’t care if I am considered part of a profession, I just want to be professional in my behaviour. I don’t care if I am considered part of an industry, a service, a profession or a trade, that is all so much pompous self-important baloney. I just want to be part of a band of men and women who deliver good honest advice.

  2. Brian Gannon says:

    Henry, I think that the work done by Michelle Cracknell and James Counsell’s teams is valuable and fantastic. I do not believe they should be a lead generation service and I do not believe the financial services industry should pay a single penny to DIRECTLY fund the excellent work done by TPAS and MAS. This is far too valuable to be paid for by the industry, this is something that should be paid for by the Treasury out of taxpayers money. I am delighted to pay for the excellent work done by these two teams as a TAXPAYER. Rather than giving charitable tax status to public schools use some of our tax take nationally to improve and develop TPAS. I don’t see why I have to pay for it just because I am a FINANCIAL PLANNER. I welcome the great work done by both areas and feel that there should be no connection between the financial services sector and the funding of what are public bodies. I do not believe we deserve a voice in influencing what these services do, and therefore without that voice see no reason for the industry to fund it.

  3. Stephen Pett says:

    The fact that we even have to consider this proposition reminds us of 29 years of largely brainded regulation. Hundreds of thousands of financial advisers culled, and we’re only just getting to the point where Big Boy crooks are even being considered for punishment. Clearly, they may develop dementia so they can’t be tried, as history shows. They will then – just maybe – mysteriously recover.

  4. Stephen Pett says:

    oops – brain dead applies to me too, clearly!

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