September 30, 2011 1 Comment
At a time when many people ought to be saving in one way or another and yet aren’t owing to lack of financial literacy, lack of funds or a basic mistrust of the financial services industry and the long term cost of the advice of financial advisers it is interesting to take a quick snapshot of what is going on.
The cost structure associated with using a financial adviser is going to change in 2013 to make it more transparent and, hopefully, perceived better value for money. Unsurprisingly, surveys suggest that this will lead to a significant exodus of financial advisers from this kind of work. For more on the changes see a Which? summary:
Financial advisers are people qualified in their field and are allowed to sell/advise specific products. OK so far.
But the overwhelming need is for people to understand what money is all about in a much more basic sense. Hence, amongst other things, the very laudable campaign by Martin Lewis of Martin’s Money Tips fame to start at a very early stage and bring such education into schools.
Another initiative is the Money Advice Service. Here are a few extracts from their site:
“Our vision is to enhance people’s lives because they take control of their money as a matter of course.”
“The Money Advice Service is here to help everyone manage their money better. We do this by giving clear, unbiased money advice to help people make informed choices.
We believe that the right money advice can make a difference to people’s lives. And when people take steps to manage their money better, they can live better too.
The Money Advice Service is a free, independent service. We were set up by government and are funded by a levy on the financial services industry.
Because we’re not selling anything ourselves, or for anyone else, you can trust our advice.”
Again, a very laudable idea, but in my opinion an underwhelming, low profile service which still does not attack basic financial illiteracy.
But that’s not the fun part. As can be seen above the service is funded by a levy on the financial services industry that is, in part, financial advisers who see this as a threat to their existence that they are having to pay for, adding insult to injury.
And, so, while the British population struggles with problems like “shall we do without heating to pay for food?” what debate is taking place between Financial Advisers and Money Advice Service? It revolves around the difference between “financial advice” and “money advice” and when does “advice” become “guidance” or, indeed, “education”.
The words “burns”, “Nero” and “Rome” spring to mind.