Why the Single Finance Guidance Body must work

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Paul Lewis’ MoneyBox ran a fun slot (21 minutes) with the results of a twitter competition Paul had run to find the best name for the Single Financial Guidance Body. “Money McMoneyface” seems to have caught the presenter’s eye but the most popular choice was to keep things as they are and revert to the Money Advice Service brand.

I suspect that whatever name the Government (with Paul’s help) comes up with, it won’t have “advice” in it. Ever since George Osborne used the A- word as part of his 2014 budget speech, “advice” has been banished from the lexicon. The Government gives guidance, “advice” is the property of Financial Advisers who guard the word as jealously as French winemakers guard “champagne”.

Back in 2017, Paul wrote the definitive argument about the nonsense of this semantic appropriation which you read here. 

Many – like my friend David Harris, see no sense in the SFGB but the fact is that for the 94% of us who don’t take Advice are to get anywhere with later life finances, the SFGB is where we can start.


For the 94% of us who don’t – “Nudge”

If the 94% of us (FCA stat), who don’t pay for advice, want to know what to do, our best bet is to take guidance – which is different from advice in that it doesn’t provide a definitive course of action – but a nudge in a certain direction.

I expect that “nudge” has also been appropriated but it’s my choice of rebrand for SFGB.

I doubt  you’d need to link nudge to any other word – for people know what nudging’s all about, we’ve all been nudged by this auto-enrolment thing – nudging is about getting people to behave better – without telling them what to do.

We need to be nudged towards saving more, towards finding our pensions, towards managing our pots together, towards knowing about our state pension entitlement, to dealing with any defined benefit from company schemes. Most of all we need to be nudged into spending our savings in a sensible way.nudge 2

Taken together, the business of self-managing our financials for final third of our lives is a pretty high priority item. If we had a financial planning risk register, this would be the “red item”, the one we are least prepared for and the one where there is least guidance available.

Which is why the single financial guidance body must work.


It’s a genuine non-compete for advisers

A strong and vibrant SFGB will be good news. While all pension providers should be keeping close to customers to and through retirement, the fact is that most don’t and can’t. People are reluctant to throw their hat in with a single provider any more than they are prepared to pay for financial advice.

People genuinely value free impartial guidance and TPAS showed – with a minimal advertising budget, that it could provider a service for around 200,000 people a year for a relatively small amount of money (around £6m).

SFGB will be better resourced and will hopefully have greater capacity, there is no  reason to suppose it won’t do as good a work as TPAS did.

The work SFGB can direct those people back to financial advice or signpost self-help opportunities. What SFGB cannot do – is to give advice itself. Consequently it should be both a resource for advisers to signpost people to and a source of new clients for advisors.

So it makes no sense advisors dissing the SFGB, even if their fees support it. Advisors should have a say in how SFGB interacts with them – they are one of its stakeholders- but they should regard it – as pension consultants view the Pensions Regulator – as part of the solution – not competition.


It’s a lifeboat for the consumer

So far, the various parts of Pensions Wise have not quite delivered more than the sum of those parts. This may be because the idea was misconceived or because pension providers are not properly promoting it or because it needs a single financial guidance body to bring it to life.

The consumer is not yet talking of Pension Wise as the solution to their retirement problems and five years since its announcement, Pensions Wise has not made it to the top of our financial charts.

Its website as progressed but it trying to do a huge job with precious little support. For instance, when you click on how you can spend your pension pot, you are provided with an exhaustive list of options , but nothing that can tell you what’s best for you.

The single financial guidance body can – and I hop will – be used to help people make sense of the options people have and equip people to spend their savings as meets their needs.

Without this guidance – this hand holding – consumers are left with empty options. All too often this leads to inertia , frustration and ultimately to bad decisions.


It’s a way to restore confidence in pensions

I know that the SFGB is about a lot more than pensions, and that in the real world , pensions are only part of a bigger financial picture, but for most people, the nastiest hardest problem they have to face is how to stop work and SFGB can give them the confidence not just to plan for the future but to take practical steps to wind down.

Of course many of us won’t start winding down when they get to 50 or 55 or event state pension age, but the fact that people now know there is somewhere they can go for a guidance session when they reach 50, something they can do with their retirement savings from 55 and a decent state pension waiting for them from their state pension age is good news.

Pensions need positive good news story and SFGB should be one. Whether you are reading this as an adviser, a product provider -or most of all as a consumer, you should be getting behind the SFGB.

I’ve met the new boss and I know where he’s coming from. John Govett’s got a tough job but he’s got his management team in place and he’s busy integrating the various components of the SFGB, making sure that basics like getting paid – are done and starting to plan for the future.

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John Govett – SFGB CEO

By the end of the year, SFGB should have a new name and (more importantly) have a business plan that I look forward to contributing to.


The SFGB is too important to fail

I stop short of the claims made for the SFGB by Guy Opperman, 

There is no way that this new organisation is going to be transformative in the way he describes in this article.

However it should not fail – as MAS failed in its early years, through poor governance.

Just as we as stakeholders have a responsibility to promote SFGB, so we have a right and indeed a duty to tell it where it is going wrong.

I look forward to seeing a proper interaction between SFGB and its principal stakeholders, if it becomes a part of our financial infrastructure and is allowed to flourish without political interference, it will become a great force for good.

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About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to Why the Single Finance Guidance Body must work

  1. Adrian Boulding says:

    It would be a travesty to put “advice” in its title.

    Today in the UK the word “advice” means that the recipient can rely on the giver having undertaken sufficient analysis of the recipient’s personal situation that it is now safe to follow the advice.

    Unless SFGB is going to do a lot more fact finding than its predecessors that will not be the case, and the recipients of SFGB’s outpourings will still only be part way down their decision making process with lots of personal reflection still needed. (As MAS TPAS and PW will have encouraged them to undertake)

    Adrian

    • alan chaplin says:

      I think that is only true Adrian in the financial service provider bubble. For most people in the UK, advice has the same meaning it has always had. I give and receive advice everyday. Only a small fraction is professional and/or regulated and there I am very careful to specify the scope of what I am providing and in the rare occasions I buy advice, specify what I want…

  2. John mather says:

    Maybe the way to simplify this is to remove advisers all together and have everyone advised/guided by Government. They make such a great job of negotiating and have insight on what is good for the economy perhaps that can be replicated for the welfare of the general population

  3. Brian G says:

    It will be interesting to see how the SFGB evolves. One guidance body cannot be the solution for all of the people all of the time. Pensionswise and TPAS have provided fantastic guidance, support, help and information to many thousands of people over the years. But that in itself is clearly not enough for those who would benefit from more personalised help. The debate is not whether there is a cavernous gap to be filled in the field of financial decision making, it is more HOW can it start to be filled? SFGB is just one tiny part of the solution and can never be a panacea any more than any other body or organisation.

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