Tim Sargisson: Carpe annum

Before we go any further – a happy, healthy and prosperous New Year to all Professional Adviser readers. Still, it has been a mixed start to the year for advisers in terms of two stories that have broken in the first few weeks of 2018.

First, the depressing news that is the Financial Services Compensation Scheme (FSCS) announcement that it is to raise an additional £23.9m following greater than expected claims about self-invested personal pensions (SIPPs).

SIPP claims is the debacle that keeps on taking and seems to show no signs of abating. The stable door is still wide open and the nag long since bolted, but what is actually going on here? For one thing, is this really the price for investor choice as FSCS chief executive Mark Neale would have us believe. Putting it politely, this is an extraordinary statement and worrying in the context it is given for two reasons.

The first is in terms of reinforcing the fundamental flaw with the whole rotten structure which is that the polluter does not pay. It is the rest of us who pick up the tab for the wilful behaviour of others driven by ignorance and greed in recommending investments that fall over and so take everyone down with them.

Tim Sargisson: Steel yourself for another pension scandal

The second is that the corollary of Neale’s point is it absolves everyone of the need and responsibility of managing risk in their business. I have made the point in previous blogs that Stevie Wonder has a better handle on managing risk compared with too many in our industry when he came out with the line in his song ‘Superstition’ that if you believe in things you don’t understand then you suffer – along with the rest of us I might add.

The point is that choice and risk go hand in hand and, as advisers, it is our responsibility to manage both elements for our clients in a sensible and proportionate manner.

The British Steel debacle highlights how much further we still have to go. Let’s be honest, if it had not been for the swift intervention of the FCA – largely at the behest of Frank Field and the rest of the Work and Pensions Select Committee – these steelworkers, with average transfer values in excess of £300,000, could have been persuaded to invest in all manner of toxic stuff.

With up to a dozen firms banned by the FCA where the method of engagement seems to have been to attempt to sway workers over ‘sausage and chips’ or ‘chicken in the basket’, it is has be asked how, after 30 years of regulation, firms are still in business if they believe it is acceptable to operate in this way? Where is the real protection afforded to vulnerable people?

On the plus side 

On the plus side, Platforum welcomed 2018 with its latest ‘Consumer Insights’ report and, with it, the good news that the tendency to be entirely self‐directed decreased in 2017. This contrasts with the substantial increase Platforum saw this time last year. Similarly, the proportion of entirely advised investors fell off considerably a year ago but the latest figure is back in line with previous years.

Platforum’s research confirmed 34% of British investors deal with their investments themselves, with no help or advice from experts, while 18% leave it all to an expert and have as little to do with investment as possible.

The new data is consistent with a long‐term trend towards a higher level of self‐directed investing – nevertheless the demand for advice looks resilient. Moreover, the future intentions of cash savers who are thinking about investing suggest there is a healthy pipeline of new investors who may need advice. The fly in the ointment is that half of these are likely to go to a high street bank compared with one fifth who would go to an IFA.

Clearly the more negative headlines we have seen in recent weeks do nothing to enhance the reputation of the adviser community and 2018 must be the year for a concerted collective effort to demonstrate how we add value by supporting consumers to achieve their financial goals.

Published on 16th January