The advice gap and support of retail consumers is something I have written about before and it remains a hot topic for the FCA. Apparently, 17th June was National Eat your Vegetable Day (who knew!!?) and Emily Sheppard, FCA chief operating officer, chose to link her speech at the Association of British Insurers to this topic. She likened the new 5 year strategy to a “nutritious 4 a day”;
- Fighting financial crime – the antioxidants. Neutralising the bad stuff, strengthening trust and integrity.
- Being a smarter regulator – the fibre. Clearing out what’s no longer needed, keeping the system moving.
- Supporting sustained economic growth – the carbohydrates. Fuel for firms, consumers and markets to thrive.
- Helping consumers navigate their financial lives – the vitamins and minerals. Vital to health, supporting wellbeing and resilience.
For those readers more concerned with proportionality, plans to support growth, smarter regulation through faster authorisation through streamlining and rationalising regulatory returns, financial crime and staying ahead of ever increasingly sophisticated criminal activity – you can read the whole speech Eating your regulatory greens: a balanced strategy to support financial services | FCA
Naturally given my previous articles it’s what she had to say about number 4 which was of most interest and chance to see if what is planned, chimed with my recent experiences. She mentioned the 7 million people struggling with debt and the challenge that brings. She goes on to say “To help protect people from financial shocks and provide properly for their overall financial health, we need growing, well-functioning markets.” Whilst I don’t disagree with this, I still maintain that it is about education and trust. Whilst investing is no laughing matter, the use of analogies (like he 4 day idea), is what we need to do to engage with potential investors so the information is rememberable and digestible.
the bulk of wealth in the UK is now in the hands of women and that you don’t need lots of cash to invest.
This month I gave a talk to a Women’s Institute group with my catchy presentation title of “Financial Wellbeing and the Basics of Investment”. To lighten the mood and give a nod to what I know was going through everyone’s head, I did have a graphic of a woman yawning next to the title. Of course, tales of incorrect currency conversions for the late Queen’s account, missing dates of a gold future’s contract which nearly resulted in having to reinforce the floor to receive that weight of gold, deliveries of actual commodities like 10 ten tons of oranges and live long horn cattle, kept the attention of the audience.
The series of graphics which always prompt surprise are the questions around the basics;
- How many of you would be confident to say you know the difference between saving and investing? – Always less than 50% of the audience feel confident.
- Have you made a will and if you have is it up to date? – Mostly yes, but as many of the ladies will be widowed a good proportion, again around 50% will admit they have not reviewed or amended it and will also be happy to say that they “think” some of their executors have died since it was written.
- Do you have a LPA in place? – This is becoming more positive, with most being aware of the LPA’s but not always aware that there are two types i.e. Financial and Property AND Health. Interestingly, at this month meeting I did get the question, “Can I do this myself or do I have to use a solicitor because they have quoted £750 for the service?” Whilst I’m not surprised that the solicitor didn’t mention that you can do this yourself, if there was a financial adviser on the scene, I would expect them to be signposting this. Of course, if you cut the Solicitor out you would have money you could set aside for good financial advice. There is no surprise when I mention that only 9% of people in the UK pay for financial advice “How much will it cost?” is the common follow up question from the audience.
- If you don’t invest, is it the risk warnings that put you off? – Absolutely yes is the response to this question. I have written about how risk warnings should be more creative to alleviate the fear they instil. We all know that over the medium to long term a diversified portfolio will beat inflation, and I use a very simple risk return graphic to help with this, but I’m concerned the message still is not getting through.
What did prick up the ears of my audience was the stat that highlights the bulk of wealth in the UK is now in the hands of women and that you don’t need lots of cash to invest. I don’t say it to my audience, but I can’t help feeling advisers are still not tuning into the hopes, needs and fears of these potential investors. I come to this conclusion from the conversations I have with individuals who approach me afterward, many have complaints about well-known organisations (who will remain unnamed) and they are not being well treated or in some instances respected in the way I would expect. In most instances, I know from the outline they give me, these firms are following the regulatory requirements but certainly not the spirit of the Consumer Duty (of care) obligations. One lady outlined her discontent with her husband’s Wealth Manager, so she is moving the money away from them. With her own monies and what she has inherited from her now deceased husband, that group are losing a £1.5m total portfolio because they keep sending her generic computer-generated letters.
I prepare an additional handout for the WI’s I go and see and send it afterward. It is only a signposting note providing details of;
- Common state benefits and the link to HM Government with details eligibility and claiming
- Details of where and how to obtain an LPA directly through HM Government (Office of Public Guardian)
- Details of the “Which” comparison of Investment Platforms for those who want to investigate investing for themselves
- Links to free will writing services
- Links to independent comparison sites to begin trying to find a financial adviser, if they feel they want to
- A reminder that Martin Lewis has guides to investment instruments (ISA rules for example) and updated lists for saving rates
None of this is rocket science, and I make it very clear I can’t comment on individual firms or give advice on individual investments. Maybe I do need to change the title of the presentation and call it something more catchy i.e. Financial Wellbeing, as important as your Five a Day? I’m hopeful in a very small way I’m supporting the aim “Helping consumers navigate their financial lives”, the subtitle heading of Emily Shepperd’s speech and hopefully doing something to help people be more informed, confident (and less bored??) about investing.
