Article by Phil
Banks are coming back into the market to provide financial advice for pensioners along with wider investment advice.
They have been slowly creeping back into the advice business over the last few years after almost all disappearing back in 2012.
Nat West are the latest to make a big move with their £2.7 billion purchase of Evelyn. The deal brings in £69 billion of investment assets under management and will make Nat West the third biggest player in the wealth management market behind St James Place and Hargreaves Lansdown.
Lloyds made a similar move last year when they completed the purchase of their former wealth management partner Schroders. HSBC have ramped up their wealth management division and are targeting growth to £100 billion in assets, whilst Barclays were also hoping to buy Evelyn, and are no doubt looking for someone else.
Targeted advice opportunity
All this should help to open up opportunities for financial advice for pensioners and others. With Banks well placed to step into the new market for targeted simplified advice. Most of the advice will probably be delivered digitally or over the phone as most Banks have cut back on their branch networks. Whether this will help pensioners in particular remains to be seen.
But according to Unbiased, AI is proving to be a useful tool to generate new advice enquiries. Unbiased says that AI has increased by over 100% and is responsible for creating an extra £11 billion worth of leads over its UK and US operations. According to Scottish Widows 72% of people using an adviser would consider AI as part of their advice solution. Although 50% still wanted a face-to-face meeting.
On top of this, the lure of the impending £3 trillion to £5 trillion asset transfer down a generation is too much for the Banks to ignore.
The FCA might also be thinking about helping Banks. It’s rumoured that they are considering allowing level 2 qualified individuals provide some elements of the targeted and simplified advice. This might be where an individual was just looking at a single type of transaction where their wider circumstances weren’t being considered.
Currently only a fully qualified adviser with a Level 4 Diploma is allowed to provide advice. Most advisors have concerns about the risk of harm to customers if the advice qualification is “dumbed down.”
This is interesting but should it apply to pension transfers for example? Last year there were 1.7 million pension transfers worth £75 billion. An increase of £9 billion on the year before. I think I’d be concerned if pension transfers were being made into tied Bank owned pension funds, rather than the independent market.
Concerns over Banks past advice record
Some in the industry have voiced other concerns about Banks being back in the advice market.
First of all, Banks are not independent they all offer a proposition tied to their own investments. This will not be suitable for everyone. This is one of reasons customers choose to use local financial advisors like us.
There are also concerns about the Banks reputation from last time they were in the advice market. Most were guilty of chasing sales rather than providing impartial advice. This led to thousands of complaints and millions in compensation. Some are worried that simplified advice might well be a catalyst to similar behaviours. Let’s hope not.
Financial Ombudsman Service changes
Whilst customers will continue to receive the protection of the Financial Ombudsman Service (FOS), changes are being made to make FOS more accountable. There have been concerns that they have been making decisions outside the FCA’s rules. This has been frustrating for many advice firms. Ours included. Now the FCA and the Government have said that FOS must apply strict fair and reasonable tests to the behaviour of firms. If firms have acted within the FCA rules, then FOS should not override those rules and uphold complaints.
A new 10-year cap on claims being brought is also being considered.
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If financial advice for pensioners is what you are looking for then why not contact Christina today. She offers a free initial meeting to discuss your requirements and explain how our service works. You are under no obligation to use us after that if you don’t want to and we won’t pester you.
So why not call us today on 01282 614444 or e mail us enquiries@ccfps.co.uk or use our contact form online.
