I’m annoyed about this! About it being all about us in the profession, apparently failing to address this crucial issue of the advice gap.
Recent headlines scream “ABI warns over disturbing lack of pension freedoms advice - 30% of people didn’t take advice” and suchlike. How is it our fault if advice is freely available but people choose not to take it?
In fact, the failure to persuade people that it might be a good idea to save for the future and to ask someone how to take income efficiently lies squarely at the feet of Government. There isn’t an advice gap, the advice to everyone is the same: save some money for your retirement and for things you want to do in life.
What there is though is a massive education gap. My 17-year-old daughter tells me that most of her classmates don’t know anything about savings, or mortgages or insurance or tax. She says: “Surely it is better to learn about useful life things in school, rather than about plant cells!”
The solution has got to be in education - putting personal finance properly on to the school curriculum from an early age. Getting young people to understand WHY it is important to save for the future - they might even be able to educate their parents too.
The traditional Government solution has always been to introduce new products, usually with tax incentives to entice savers. Of course, this works well for people who already have money, but completely fails the financially ignorant, those who see no point in saving and/or simply don’t have the money.
People have always been able to save - and it has never been easier than today. Apps like Moneybox, which allow people to save small amounts rounded up from normal purchases, are available to everyone with a smart phone.
If the Government provides the education and we as a profession provide the advice, the last factor has got to be personal responsibility.
We shouldn’t be afraid of putting the blame for poor decisions back onto the public if they didn’t take advice. Advice gap? Nah! Education and personal responsibility gap? Hell yeah!
- This column first appeared in the latest edition of Financial Planning Today magazine, read it for free here.
Julie Lord is chief executive and a founder of Magenta Financial Planning in Bridgend, South Wales