We live at a time of self empowerment. If we don’t know how to do something we learn, searching for answers from the web. We’ve learned how to do things from You tube, understand things from Wiki and with a little bandwidth – we can generally get there.
Self-help is not encouraged in finance. Generally self-helpers are considered vulnerable by a regulatory system that encourages the taking of regulated financial advice. In the polar thinking that results from a dogmatic belief in regulated advice, those who avoid it are in the hands of scammers. But this is patently not the case.
The vast majority of people in Britain go to the grave never having paid a financial adviser and generally they muddle through.
But there is no doubt that things are getting harder. Although those saving into tax-advantaged retirement savings plans has increased, the numbers in defined benefit plans has decreased. The dismantling of the State Earnings Related Pension Scheme in favor of auto-enrolled pension pots means people have to fend for themselves when selecting their investment pathways in their retirement.
While the numbers saving into auto-enrolled savings pots has mushroomed, support for people in their fifties and sixties has actually reduced. The number of regulated advisers has fallen over the past ten years, primarily because of the RDR but also because of the increased cost of regulation , compensation and professional indemnity insurance.
Time to encourage self-help?
The industry response to the move to self-help has been timid. A new concept has grown up known as guidance. The Pensions Advisory Service is now subsumed into the Money and Pension Service. Pensions Wise and TPAS are offering guidance and doing a good job of it. But this is a long way from what people need to do complicated things like find their lost pensions, compare and combine pension pots and make decisions on how they turn these pots into retirement plans.
Faced with what may look impossible decisions, it is not surprising that many people do nothing, or worse- take outrageous gambles with their money – ending up paying away their savings to the taxman or worse to scammers.
But I am encouraged, when I go on the websites of many major providers, about how much help there is for those wishing to explore their pension options. Many of these providers are dependent on financial advisers and may feel conflicted by providing facilities for those who want to do pensions themselves. They shouldn’t be.
There is no evidence that financial advisers are gearing themselves up to provide mid or mass market advice. The banks – in as much as they want to be involved – are restricting their activities to competing for the mass affluent.
One of the many things that I am considering doing with http://www.agewage.com , is making it a directory of web facilities available for self-helpers. It strikes me that there is ample information and what is needed is a search facility that ensures people end up with information that really helps – wherever it comes from.
Of course, all this is made more urgent by the pandemic and more possible by the way people are learning to use the web as a resource. The acceleration of self-help using the internet will I’m sure be a theme when social historians look back at the year or years of lock down.
I am so very pleased that AgeWage is able to pioneer a self-help website and application at this time, and to do so in the benign conditions of the FCA Sandbox.