A report issued today gives a scathing assessment of the Money Advice Service, which is tasked with helping individuals to manage money better and funded by other Financial Services Professionals.
I fail to see the need for such a service not least its £80m annual budget.
Broadly speaking individuals fall into three categories:
- Those who on lower earnings on benefits, who are best advised to: Spend less than they earn; pay down debts usually starting with the most expensive (highest APR).
- Those with significant assets, often a combination of pensions and investments who are overwhelmed by the options and choices available to them
- Those who have the ability and wish to save, have cleared costly unsecured debts and would like to understand how to make financial plans
In respect of the first category; I have nothing but praise for the not-for-profit Citizens’ Advice Bureau and also believe good “no charge” guidanceis provided on Martin Lewis’ Money Saving Expert (a profit making firm) . The Benefit Enquiry Line is also an excellent Government-run service.
The second category should invariably seek good quality advice, typically from an independent financial adviser or at least one who has access to a representative range of the market (read: not banks or tied agents). This adviser should be professionally qualified to an appropriate level; the highest recognised in the UK is Chartered Financial Planner.
The final category may not need any advice, especially with the introduction of workplace pensions and simple, tax-free investments such as ISAs. For these individuals Wingate (and we are not alone) would charge £600 for a comprehensive Financial Plan which covers:
- Net worth; assets and liabilities
- Risk profile, and an indication of a typical appropriate investment split
- A long-term cash flow plan, typically from present day to retirement
- Specific observations on all of the above, for example should they reduce risk, save more, and are they on track?
I am confident that the above provides significant value for the money to many individuals, and if similar firms in Britain were paid by MAS to deliver a service of this nature to the public we could improve the knowledge and financial well being of 100-150,000 people each year (as one of the most qualified firms in the UK we are not likely to be cheapest). This would be lower than the 1.7m MAS claims to help each year, but I think changes would be more meaningful. After all, how much difference does an online tool, or phone call make to someone’s life?
And for the record, the Money Advice Service aren’t regulated by the FCA to give Independent Financial Advice. Confusing, heh?