A topic that has grabbed my interest this month is the new free and impartial guidance service that the Government is setting up called Pension Wise: Your Money, Your Choice, which will help the consumer better understand how to manage their pension arrangements.
My understanding is that this set up will be similar to the Money Advice Service, where guidance is given for free but there is no advice. I have to assume that the purpose of this is to provide sufficient information on the options available to the consumer to help them make a decision that will dictate their retirement lifestyle.
My question is: will the service provide enough information for the consumer to make the right choice? Surely, without the advice to accompany the guidance there could be some unintended consequences. If we take the product of mortgages as an example, unlike pensions most people know what a mortgage is and how it works, even if they don’t have one. The process is now elongated due to the implementation of MMR with regulation of advice in place to protect the consumer and deliver the right outcome to them.
The result hopefully is that most people will end up taking advice to obtain the house they want. In my mind, guidance is all part of the advice process, explaining how it works, what is needed, and the choices along the way, taking the consumer on a journey until the process is completed.
There is a fine line between guidance and advice but the Treasury website does appear to recognise this and states: “The guidance service will complement professional regulated financial advice and other services, pointing consumers to reliable sources of further help and information as needed and helping consumers recognise the value of further specialist help and advice.”
Moving house and having a pension in retirement are two of the most significant transactions a consumer will ever make and, in my opinion, advice is absolutely key to ensuring customer’s make the right decision for them both now and in the future.