In the last couple of months, by chance two similar new online financial services have launched more or less simultaneously. Leading mutual insurance group Royal London has launched MoneyVista, and former Cofunds founder Andy Creak has launched rPlan.
I say “very similar,” but in fact there are two big differences. The first, obvious from the previous paragraph, is the David-and-Goliath thing. The second is that rPlan is fundamentally a transactional site, with a business model dependent on trail commission, whereas MoneyVista is absolutely not a transactional site and its business model depends on flat-rate monthly fees.
But while those are certainly big differences, there seems to me to be a much bigger similarity: both are predicated on the idea that the most valuable, appealing and important thing they can offer us is the chance to create and manage a “financial plan.”
Not being a customer of either service, I don’t actually know exactly what they mean by this term. But I must admit that in the current climate, I am more than a little dubious about the customer appeal, and the real long-term value, of such a thing.
I suppose that at an emotional level, the idea of a financial plan may be appealing in uncertain times specifically because having one does give you a reassuring feeling of preparedness for what Allied Dunbar used to call “the life you don’t yet know.”
But thinking about it more rationally, I’m sure that almost all of that feeling is much more apparent than real. Now more than ever, during this lengthy period of financial and economic turmoil, people are having to recalibrate their expectations on a more-or-less monthly basis. With all kinds of pension provision under massive pressure, retirement dates are being pushed out further and further into the future. Lifestage costs – kids’ educations, parents’ care homes – are rocketing at levels that make 5% RPI inflation look like paradise. Every day, thousands of young people are giving up on the dream of ever buying their own home – the dream of getting a job looks quite unlikely enough.
I’m 58, so by now I ought to have some reasonable clarity about my future and specifically my financial future. But I absolutely haven’t. Amidst stock market turbulence and ever-falling annuity rates, I have no idea what kind of retirement my pension fund could buy me. With two university-age children, I have no idea what financial support they’ll both need over the next ten years or so. With a one-man consultancy business, I have no idea what my earning potential might be over the next year, let alone the next decade (and the reality is that my uncertainties on this subject aren’t much greater than friends employed in the corporate sector, some of whom are now up to their fifth or sixth redundancies).
I could go on, and indeed on, but you get my point. If a “financial plan” simply means squirrelling away as much as you can, whenever you can, so that despite the risks of plunging stock markets and soaring inflation you’ll hopefully have some kind of cushion for whatever the next crisis turns out to be, then I suppose that’s no bad thing.
But if MoneyVista and rPlan have some sort of bigger-picture, longer-lasting, more strategic concept in mind – one in which we’re really able to draw up a reasonably clear picture of the life we want to lead in the future, and then manage our finances in a way that gives us reasonable confidence that we’ll be able to afford it – then they’ve got to be kidding.
I’m not sure if real life was ever very much like that. But these days, it seems absurd even to pretend that it might be.