When advice sits behind a paywall.,,,


One of the many pleasures of it being summer is that I have time to contribute to newspapers. I searched myself on the Times website and found out I’ve been contributing to their articles at a rate of one a month for the last year. So maybe I’m selling myself short – perhaps Im a “regular contributor”

Though obviously no rival to (ahem) John Ralfe!

Advice behind a paywall.

Yesterday I was able to comment in the Times on an FCA press release and was quoted on page 12. If you have a paper copy, my comments sit beneath pictures of Mick Jagger and Keith Richards.

If you don’t  I’m afraid, that like financial advice, my  digital comments sit behind a paywall!

Five million pension savers are in danger of losing their savings to scams that guarantee high returns, regulators warn.

The Financial Conduct Authority (FCA) and the Pensions Regulator say that savers have been too willing to be taken in by the promise of exotic investments and too many discuss their pensions with unsolicited callers, even though cold-calling about pensions has been illegal since January.

Their findings in a report today have been criticised by pensions experts who believe that the FCA has been too timid to protect savers since the introduction of freedoms in 2015 that let people access their pension pots from the age of 55 without having to buy an annuity.

“The government is scared of scammers but who opened the door to the chicken run?” asked Henry Tapper, the founder of AgeWage, a pensions rating system.

“When George Osborne [then the chancellor] promised us no one would need to buy an annuity again, he invited every fox in the land to a lifetime of chicken dinners.

“This research should have been conducted before we got pension freedoms, not four years after.”

It sounds like the FCA are getting fed up with us behaving like muppets , but why should we be anything but confused. The FCA don’t make it easy for us to know the difference between advice, guidance and scams. When I perused the notes to editors on the press release I discovered I could still contact TPAS

6. The Pensions Advisory Service provides free independent and impartial information and guidance. 

and better still I can get free independent advice from Pensions Wise

7. If people aged 50 or over require free independent advice, they can contact the government-backed Pension Wise service. To book a free appointment, visit www.pensionwise.gov.uk/en.

But we can’t get free independent advice from Pension Wise, unless it’s to go and see an independent financial adviser (who aren’t free). TPAS is now subsumed into the Money and Pension Service which has been neutered of its “Advisory” title.

The Government does not make financial advice – independent or otherwise , available to ordinary people and it should not be suggesting to journalists that it does. If we define advice as “the provision of a definitive course of action” , then advice sits behind a paywall.

paywall big.jpg

Bypassing the paywall

Most people  take financial decisions about their retirement benefits without guidance or advice. Only about 10% of people who are eligible , use Pension Wise and they are the kind of people who will be amenable to taking advice. Estimates vary, but the FCA have told us that only about 6% of us pay for financial advice on an ongoing basis.

This rather clumsy diagram shows how AgeWage research suggests people divide up when taking decisions about their pension savings.

Screenshot 2019-08-04 at 09.05.28

Which type of decision maker are you?

‘Im not asking you to answer this as a pensions professional but as an ordinary member of the public with the prospect of a diminishing income from work.

I am genuinely interested in how people are behaving, as – I know – are the authorities.

One of the reasons is that over the next four weeks, I’m going to be managing some workshops for employers and trustees whose staff and members are having to take difficult choices without much of what the FCA call “choice architecture”.

Just organising the choices people have into a simple diagram, helps me to think about the problem.

Do you agree with the four choices I’ve identified?

Let me explain a little

Most people know enough about pension freedoms to remember that they include “never having to buy an annuity again”. As “buying an annuity” was the only choice most people had, this was a big shift in choice architecture in 2014 when it was announced and remains the first thing most people will think of when they think about their pension savings.

But if not an annuity – what?

The simple answer is that you can choose

  1. to have all your money at once – today – so long as you are 55 or older
  2. to have your money in stages, known as drawdown
  3. to leave your money to your inheritors.

My diagram has a box for two out of three choices of these choices , but it also has a box for annuities. I’ve not put a box there for people who want all their money at once because I think such people are special needs. Most people who take all their money at once are muppets. According to my muppetometer, they are 100% muppet (though there are times when you have to be 100% muppet for tax purposes because the end justifies the means (you just have to have the money.


So why do I include annuities in the choices?

Simple, because loads of people still buy annuities and they do so by searching for annuities on google. Retirement Line – who are annuity brokers – don’t get their inquiries from pension providers but from google.

This is a breakdown of the annuity choices actually made by people in 2018  – as delivered to Frank Field by the FCA

Screenshot 2019-08-05 at 06.38.00

IFAs will occasionally recommend an annuity – but it’s the exception that proves the rule, the vast majority of annuities are purchased through independent brokers like Retirement line and LEBC or the broking arms of the insurance companies – JUST Retirement (Hub), Standard Life, LV= and Sun Life Assurance.

I would be surprised if 1% of IFA inquiries on annuity choices result in the IFA recommending an annuity. The numbers I see show that the vast majority of annuity decisions are taken through annuity brokers who are not financial advisers (LEBC being an exception

What the table does not show is the number of people not visiting Pension Wise, not taking financial advice and not taking a decision that e

The truth is we do not take decisions at retirement in a holistic way. We buy through google, through our pension provider and I am afraid to say, we buy with the help of scammers. At retirement is a mess (and I’m sorry that this section of the blog reflects that).

When advice sits behind a paywall..

The FCA have run out of people to blame. They have blamed financial advisers over transfers.  They have blamed insurers over annuities. They have blamed everyone for non-advised drawdown.

Now the FCA have moved on to blaming the general public for not fighting off the foxes. The foxes are in the chicken coup because George Osborne opened the coup door and invited them in.

I am with Jo Cumbo.

People need access to proper help with their pension choices

What I will be telling the employers and trustees at the AgeWage summer workshops  over the rest of the summer is this.

If employers and trustees want to protect their staff and members from poor at retirement decision making they are going to have to do more than install a token IFA to advise staff.

They are going to have to help not just the people who would not normally take and pay for financial advice, but those who don’t and won’t.

That means signposting not just Pensions Wise, but the other options, the non-advised options available from their  workplace pension providers, annuities available through reputable brokers and especially the option to do nothing.

Doing nothing when the scammers call, is the best option of all,

If you want to follow up on the ideas in this blog…

If you represent an employer or trustee board and are interested in the ideas in this article, join me, Retirement Line and Quietroom at one of our summer seminars, some are sold out but we still have space at the end of the month.

You can find out dates, locations  and availability here.

AgeWage summer seminars.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in advice gap, age wage, pensions and tagged , , , . Bookmark the permalink.

5 Responses to When advice sits behind a paywall.,,,

  1. Brian G says:

    Hi Henry, whilst applauding your desire to help people make better choices, I do wonder if you are the right person to lead this crusade? I totally agree with the part of your analysis in regards to George Osborne creating a whole raft of opportunities for scammers with his pension freedoms bombshell announcement. I agree that there is no such thing as free independent advice, and that TPAS/MaPS clearly cannot and do not give advice but only guidance. And I agree that the regulators have failed to step up to the mark, and that rather than helping the public avoid scammers they have sat by and created an environment where the cost of giving advice is so prohibitive that scammers can walk in through the hole in the advice wall and appear to be offering amazing products and solutions that the general public do not have the knowledge to recognise as bogus. But your assumptions about who is a “muppet”, whilst mildly amusing are so far wide of the mark as to be dangerous. You clearly do not know enough about the UK benefits system, and have lived in a world where you have mainly dealt with wealthy people who are not typical of the general British public (I am sure you can give me anecdotal examples of BSPS employees but they are not typical as their pot sizes were simply massive compared to the average pension pot for the average pension saver). If you understood how the benefits system worked you would understand that taking small pots all at once whilst still working is actually a very sensible choice for many less affluent people. I don’t agree with the morality of their choices but in many cases if I ignored the moral side of their choice I would also take my small pot whilst still working if I had a very small pension pot. Also, for many people with smaller pots (I don’t mean the less than £10,000 definition of small pots, the pots could be bigger than that) who enjoy poor but not awful health the benefits of a lifetime annuity are far from clear. They may be better off spending the pot gradually using UFPLS (you haven’t even mentioned this very commonly used option) rather than drawdown and then qualifying for pension credit to supplement their state pension rather than buying a small lifetime annuity which excludes them from or reduces the level of pension credit they might otherwise get. People in severe debt whilst still working might be better advised to take a substantial amount of tax free cash and go into drawdown in order to avoid highly punitive interest rates. There are countless number of examples where the obvious choice of an annuity is not the right one even though to the naked eye it would seem the obvious choice. Most employers are right not to intervene too much in advising staff about their pension choices, because simply being an employer does not confer any special gift for understanding retirement choices. This is why employers are not allowed to give advice and are not allowed to be too involved. They might in their desire to be helpful give entirely the wrong steer to people. So whilst I admire your go-getting save the world approach I think there are some clear things to reflect on when designing your programme.

  2. henry tapper says:

    If you read the post that appeared after this one Brian, you would see that I agree with you. I hadn’t read your comment at the time and I’m pleased we find so much to agree about

  3. Helena Wardle says:

    I agree about the blurred lines of advice and guidance, if you are not already aware of this Boring money did a research report covering consumers views on advice. Its an interesting read:


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