FCA -If you’re looking for innovation….get real!

The FCA says it has found precious little evidence of innovation from its Retirement Outcome Review. I am not surprised, judging by the people who it invites to its “workshops”, it is looking in the wrong places. It is necessary to talk to entrepreneurs like Romi Savova of Pensions Bee and Anthony Morrow of Evestor if you want innovation. Neither was at the workshop, they should have been.

Last week, I was in a stern meeting with NEST’s COO and Romi Savova where Romi agree to help NEST to re-think its current strategy to transfers-out ( which take on average 49 days).

morrow 2

Savova innovator


Yesterday, Anthony Morrow wrote me a request to contribute to the debate which he did on my blog – advising the 5000. Here is that comment.

As you know Henry, I share your frustrations and anger at the Industry’s continued refusal to create a solution to the “advice gap”. I choose the word “refusal” carefully because that is what it is. There are no regulatory or operational reasons why providers and/or advisory businesses cannot deliver a proposition that would provide financial advice to all members of the public regardless of age or wealth.

There are only commercial reasons and to suggest otherwise is wildly disingenuous.

The lobbying for the FCA to introduce a new category terms “guidance” is essentially the Industry saying, “we want to manage their money but we don’t want to have to take on any risk of providing them with advice – do something about it and give us a safe harbour.” That is why we are seeing so many non-advised solutions coming on board apparently to satisfy customer demand because people don’t want advice.

I have no idea how these surveys are carried out and the questions framed but the idea of people with little wealth and experience choosing to turn down the offer of advice so that they can make their own decisions is fanciful. Rather they do not want to pay the fees that are quoted now for that advice. That is a very different question.

I cannot think of one scenario where I, as the lay person, would turn down advice from an expert so that I could make my own decisions based on the content of a few website pages regardless of how shiny they were or beautiful they looked in an App. It is as ridiculous as it is irresponsible to think that.

In fact the subject of retirement option is so complex that the Industry deems it necessary to create an advanced examination on the subject for those advisers who are active in this area to take. Yet somehow we seem to think a large swathe of the public, many of whom are being faced, in the example of D transfers, with sums far greater than possibly their entire asset base, can make these decisions on their own.

The problem is that we are too used to feasting on rich pickings of fat margins and too chastened by past experiences of mis-selling to want anything different.

How many firms who say that it is unviable to deliver a service to the mass-market have actually tried to build one? Is it not that to deliver this service, addressing the very real concerns about the level of fees, would mean they would have to make less money than the status-quo and therefore why bother?

When me and Duncan started the concept of evestor almost two years ago we only had two clear objectives:

Widen the availability of financial advice to everyone regardless of age and wealth
Lower the cost of financial advice to make it affordable for everyone

In the 3 months we have been launched we have achieved that with a client base that ranges from 18 to 81 and investments from £5 per month to over £100,000.

We have provided through the system over 1,000 recommendations of which over 70% were not to invest either because of debt levels, lack of rainy day funds or no capacity for loss. The incremental cost of those recommendations in negligible beyond the R&D of the build itself and the maintenance. Arguments contingent charging are predicated on being unable to manage conflicts of interest and also ignore totally how else those with more modest means should receive advice.

Our access to humans via webchat or through qualified adviser virtual meetings have made a massive difference in the customer experience as it provides customers with a level of comfort and validation to make those decisions. As your article notes there are some areas of finance that are very difficult to articulate completely to the lay person via digital-only medium. Our hybrid approach deals with this.

We have concentrated on accumulation only at the moment but will be launching a decumulation service very shortly including DB transfers which we will be bringing in within the same pricing model as our standard model e.g. no initial fee and a total ongoing cost of less than 50bps. We can do this because we have very efficient systems and realistic expectation on long-term profitability.

There are no doubts in my mind that the 5,000 can be fed but first we have to want to feed them.


Morrow – innovator

Yesterday was also notable for the publication of a very radical blog from Paul Lewis


Like Anthony, Paul is fed up with the hi-jacking of the “advice-word” by Financial Advisers who are monetizing it to the exclusion of those who cannot or will not pay a premium for conviction.

Paul Lewis

Lewis -innovator


There is of course “advice” in both the Money Advice Service and the Pensions Advisory Service. As Michelle Cracknell, CEO of the latter commented to me after reading Paul’s article, the debate is not about a “real world problem”. She’s published an excellent pamphlet “Advice and Guidance – recognising the difference” – as part of TPAS’ Insight Fact File series.

This is getting to the nub of the problem. To innovate, we need to take a step back as Romi, Anthony, Paul and Michelle are all doing and ground their thinking in what people need “in the real world”.

So many of the problems that the FCA identify, including the hang-up about advice and guidance , disappear in the real world in which we live our lives, save our money and plan our retirements.

morrow 3

Cracknell – innovator


Re-connecting with the real world means looking in places that the FCA are not currently looking, it does not get a mention at Retirement Outcome Workshops, as I found out to my great frustration!

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to FCA -If you’re looking for innovation….get real!

  1. Brian Gannon says:

    What a sorry mess. Created by confused regulation. The use of the words advice and guidance and selling are just semantics. If we look at it in terms of service provided, there is a difference between a service that is regulated and a service that is not regulated. The service that Paul Lewis provides is totally free of charge, and he has absolutely no regulatory oversight or compliance placed upon him. He is free to provide his column without having any recourse to legislation or regulation and cannot be sued for anything he says. He earns his money by getting a readership/audience/following so that the media in which he displays his service can earn money via the additional readership/clicks/audience figures he contributes towards. Paul simply needs to be interesting and provocative and to appeal to and interest his following. He has no obligations for anything he says to be true or accurate. It does not matter what we call Paul, it does not matter what his job title is, he provides this service. If we called him a financial adviser he would still be providing the same service. I don’t give a monkeys what he calls himself, he can call himself a financial adviser for all i care. He does what he does brilliantly. But he sells his services for money. He is a salesman. He is not guiding and he is not advising. He is writing. He does not meet people so he cannot guide people or advise them. He can only inform them and opine. He never meets anyone face to face to know whether or not he is guiding people or advising people. He is an informer and educator and promoter of the way he sees the world. I think that whilst I disagree with a lot of what he says and writes, there is far more that I agree with. But he is a writer and speaker not an adviser or guider. It may be that people listen and read what he says and as a result of that are more informed, but when he says he gives financial advice, he doesn’t. But as I say it is not the words that matter it is the fact that he does not speak to individual people to know whether or not he has helped them.

    The Money Advice Service is a very very expensive way of providing web based debt information. Again I don’t care whether it is called Money Advice or Money Guidance Service or Debt Help Service. It is a web based information service with some helplines. It is very very expensive and costs far too much money for the output it has produced. I have no idea why the financial services industry has to fund it, it should be a public service funded by the taxpayer. I don’t know of any regulated financial product providers or any financial adviser firms that would ever encourage people to pay for things they can’t afford on credit. So the only organisations who maybe should pay for this service along with the taxpayer are those who provide credit, whether that be loans, mortgages, credit cards, hire purchase agreements or other such lines of credit.

    The Pension Advisory Service is excellent. As an advisor I have absolutely no expectation that TPAS is there to direct their users to regulated financial advice, but i am more sympathetic to the logic of funding this wonderful organisation. Pensionwise is also a great concept but the trouble is that for both TPAS and Pensionwise they cannot stray into the world of individual regulated activity. So it must be very frustrating for the people going along to see Pensionwise or on a phone call to TPAS asking the question: so what should i do then? and being answered with “I am not able to tell you that but is there anything else you d like to know about your options?”. But that is not because there is a financial adviser telling TPAS/Pensionwise not to say anything more helpful, it is because of our regulatory framework. So I really do not agree with Paul Lewis feeling financial advisers have caused anything other than possibly taking ownership of the word “advice”. They have not dictated the regulatory framework which hamstrings them just as much as TPAS/Pensionwise and Money Advice Service.

    Good financial advisers do all the things TPAS and Pensionwise do but then go one step further and answer the question “what should i do then?” and then take on the responsibility for that advice. And very good financial advisers then sell/motivate/inspire the client to take action on that advice, whatever that advice might be.

    As for selling as well as advising, well that may well be true. I hope it is. Advice without action is pointless. A doctor who diagnoses the problem but does not write a prescription is a bit pointless. A doctor who prescribes but does not inspire and reassure the patient to collect the medicine from the pharmacy is also pointless. They might stop the patient from worrying what is wrong with them but if they do not inspire them to take the medicine that will help them they are not much use as a doctor. Selling is what Paul Lewis does. With his words. We all sell. Otherwise nothing happens. Advice is utterly pointless without something happening. MAS cannot judge its efficacy because there is no way of knowing what people who clicked on their site did to sort out their debts. Guiders are lovely and offer a warm cuddly trustworthy set of information,but as long as they stick to their remit they won’t ever be responsible for what they say since what they say has no direct definite impact on what their clients do.

    If we could change regulation then maybe more people who need it would be directed what to do based on their circumstances rather than just being given a menu. I am all for change.

    • Mark Meldon says:

      Well said, Sir!

      I think that the biggest problem here isn’t necessarily regulation (or the lack of it) but education (and the lack of it). Most of my work is with what I nowadays call “private pensions” – these are mostly SIPPs from an actuarial practice invested in conventional assets such as investment trusts but I do recommend “insured” schemes, too.

      My clients are bright and hardworking but often fail to grasp things like “why a lifetime allowance?” or “why might my estate be subject to tax if I die within two years or transferring when unwell?” Neither I nor my clients created the complexity that has arisen since “pensions simplification” in 2006. That’s down to HMRC and the politicians.

      The lack of education (or interest!) does end up with subjective errors being made by individuals, IMHO, and good advice (whether sales or not) can very much help with the “fuzzy” things!

  2. Phil Castle says:

    I agree with both Brian & Mark. The problems aer ALL of the making of Govt and Regulators.
    I ahev tried to engage the F-pacdk with alternative methods of delivering ADVICE in a cost effective manner in an economical way which does not risk the firm or adviser being made bankrupt based on the opinion of a non appealable Ombudsman.
    The Police are and always have been (in the majority) honest servants of the community, but just like Financial Advisers, they have had their bad eggs. The solution fort the Police force was PACE which included recording of interviews. This is what I have said for over a decade could and should be done to prove the adviser DOES KNOW their Client and unlike a written suitability report tone of voice, use of language and consuemr response demonstrates intent, understanding or lack of udnerstanding of both parties.
    I don’t deal with rich clients, I try to work efficiently and cover my arse while doing it by recording all consumer contact.
    It IS doable, but understandably, we need joined up thinking from PI insurer and the F-pack (FCA, FOS, FSCS) as to the rights of the consuemr and responsibilities of the adviser, but there is the reverse too, i.e. rights of teh adviser and respibilities of the consumer.

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