Oh dear, it seems we’re disappearing even further up our own (linguistic) backsides

I’ve written on more than one previous occasion about this industry’s weird obsession with the word “advice,” and how we insist on using it in all sorts of ways that confuse the hell out of our poor old customers.

For many years there was just one, big, single confusion – we used “advice” and “adviser” as euphemisms for “sales” and “salesman.”  But since then, and especially since the regulator got in on the linguistic act, it’s got a lot more complicated.

The underlying source of our present confusions is still, ultimately, a single point, albeit a different one:  that according to the FCA’s definition, financial advice means a financial recommendation or proposal that is specific to the circumstances of the individual.  Saying that it’s a good idea to have some money in income stocks these days is not advice.  Saying that it’s a good idea for you to have some money in income stocks these days is advice.

At least two nonsenses flow from this, one a year or so old and one very new.  The older one relates to Pensions Freedom, where we’re now in a situation where people coming up to retirement can go to Citizens Advice or The Pensions Advisory Service and get…

…you guessed it, not advice.  Neither of these organisations with the word “advice” in their names has a process which allows them to give advice.  Since they can only make recommendations in general terms, they can only provide guidance.  (By the way, the same has been true for rather longer of the Money Advice Service, which also can’t give advice.)

We must just pause for a moment to acknowledge that to the poor bloody consumer aiming to make sense of all this, it is absolutely preposterous that the three consumer-facing financial organisations with the word “advice” in their names are all, equally and totally, entirely forbidden from giving advice and would be in terrible trouble if they ever did so.

But now we have a new nonsense.  The phrase that has spread like wildfire across the industry in the last few months is the expression “robo-advice.”  I don’t think I’d heard it six months ago, and now I hear it ten times a day.  But looking at it from a consumer perspective, with horrible inevitability robo-advice doesn’t involve anything recognisable as advice, and doesn’t involve anything like a robot either.

The term  is used to describe online investment services where you fill in a fairly brief questionnaire, and are then offered a fund or portfolio or whatever that will be suitable for you.  It’s “advice” in the way that providing your collar size before you buy a shirt leads to “advice” when you’re only shown shirts available in that size.  You, as a customer, think that what’s happening is that you’re buying a shirt, or making an investment.  The shirt retailer thinks that it’s selling you a shirt.  Only the stupid old investment company, knowing that the regulator won’t allow it to offer you a specific investment unless it conforms to the regulatory requirements involved in giving advice, thinks that it’s giving you advice – and “robo-advice” because it’s delivered digitally, not by a person.

So a service that people might actually want and quite enjoy, if they understood it was a nice simple low-cost online way of putting money into a suitable investment, is presented in a way that sounds scary, strange and alarming, and, all in all, thoroughly off-putting.

Brilliant, financial services industry trying to get through to the mass market and regulator trying to help consumers get good outcomes, just brilliant.



“Our focus is entirely on our customers.” Well, except when it isn’t.

Of course everyone wants to be customer-focused, or -centric, or whatever.  But sometimes a problem arises:  we find ourselves with a choice between focusing on our customers, or focusing on ourselves.

Many – including me – would say that it’s the choices we make at these moments which demonstrate whether we really are customer-focused, or whether it was all, quite frankly, bullshit.

In the financial world, TPAS – The Pensions Advisory Service – is arguably more customer-focused than most.  (As a non-profit organisation, it’s arguably easier for them than for many.)

Pensions Freedom has thrown up some great opportunities for TPAS to become bigger, better resourced and more important.  As one of the chosen providers of the Government’s famous “guidance guarantee,” it’s picked up a big chunk of new funding so that it can deliver.

However, from TPAS’s point of view, a very troubling development has now emerged.  In the light of new research showing that TPAS’s impersonal “guidance” doesn’t help consumers very much and may quite often leave them even more baffled and confused, there are now proposals that before making certain decisions about their retirement savings, consumers should be compelled to take full-fat financial advice from a full-fat financial adviser, thus bypassing TPAS and having no need for its services.

There are various real problems with this, like who’s going to provide this advice and how is it going to be paid for.  But still, in principle, from the perspective of the consumer, it’s very hard to argue that it isn’t a good thing.

Unless, of course, you’re TPAS.  Seeing a chunk of their customer base – and no doubt a chunk of their funding – in danger of falling away, they’ve come up with a super-convoluted argument as to why compulsory advice isn’t a good thing, and why it would be much better if consumers took full-fat advice not because they had to, but because TPAS’s guidance guided them in that direction.

The argument is nonsensical – so much so that to be honest I’ve forgotten it – and just about the most transparently self-serving that I’ve ever seen.  It’s difficult to believe that any allegedly-customer-focused organisation could put it forward with a straight face.

Unless of course it was one of those moments where its own future success and survival temporarily came first.

Brief but essential blog (not)

On the subject of language, there’s nothing more important than resisting the temptation to over-inflate expectations.

The investment trust arm of J.P. Morgan Asset Management publish a moderately interesting online newsletter every couple of months or so.  They distribute it as a PDF, attaching it to an email.  The email always carries the headline “Essential Reading for Investors.”  The attached reading is so obviously and irritatingly not essential that I delete it without a glance.  If the email headline said “Mildly Interesting Reading for Investors,” I’d probably have a look at it.

Copywriting should never lose contact with reality.  For some reason all this reminds me of the street where there were three cobblers.  The first put a sign in his window reading  “Best Cobblers In The Country,” and immediately became hugely successful.  The second put a sign in his window reading  “Best Cobblers In The World,” and promptly won all the first cobbler’s business.  The third cobbler thought about it all for a while and eventually put a sign in his window reading “Best Cobblers In This Street.”  He now won all the business from both the others – and he kept it.

Much as it grieves me to say so, better language is nothing like enough

I’m not sure what I can have been thinking of a year or so ago, in the early days of the pensions freedom thing.

I seem to remember giving a talk at a Pensions Network event in which I said that since millions of people now have new, important and difficult choices to make, and since most of them don’t have enough money to afford personal, face-to-face advice, providers were going to have to start speaking to them in fresh, clear, accessible new language so that they could make sense of their options.

Spending a day and a half in another Pensions Network event last week looking at the first six months of experience of pensions freedom in action, I realise that what I said last year was obvious bollocks.  You could express the choices now facing people in the language of Enid Blyton stories for four-year-olds, and no-one would be able to make head or tail of them.  It’s not about language, it’s about the substantive issues – which, even when you understand 100% of it, are horribly and frighteningly difficult.

Do you want an annuity that will give you a depressingly low income for life, and nothing to leave in your estate?

Do you want to go into drawdown, find the value of your fund plummets in the Great Crash of 2025 and throw yourself on the mercy of the State for your last 20 years?

Do you want a hybrid plan of some sort so that you suffer from both of the above major drawbacks?

Do you want, say, a drawdown plan with a longevity insurance solution that sadly doesn’t quite exist yet?

If your DC pot contains a typical amount at retirement which is either side of £40,000, does any of this matter when the sums involved are so pathetic?

And in any case, should you even be thinking about any of this in isolation when there are so many much bigger financial issues like to have an effect on you over the years to come?

I suppose that in such a hugely complicated and difficult situation, the best advice may well be not to overthink it.  It doesn’t really matter whether you understand all of it, some of it or none of it:  you’ll probably get it wrong anyway.

Thinking back to where I was a year ago, I’m not sure if I’d misread the situation quite as badly as I’m now saying.  The other point I made in the same Pensions Network talk was that as a result of all the changes, consumers would need much smarter solutions which would do what they needed them to do, and adapt and evolve over time, without the need for a lot of actions or inputs from consumer or adviser.

In this sense, I think I said, the role model was the way that auto-enrolment workplace pensions, such as Nest in particular, allow consumers to default their way to perfectly satisfactory outcomes in the accumulation phase – without ever making a single decision or taking a single outcome, you finish up in a pretty good place.

This was right, but expressed with about 1% of the necessary passion and conviction.  It is frankly bonkers beyond all imagining that within a few years of introducing such a consumer-friendly approach to accumulation, the same authorities should have created a new decumulation machinery which is so spectacularly far beyond the competence of anyone remotely ordinary to operate.  It’s as if, having equipped us with a stout pair of walking boots for an outward journey, we’re now being given a Jumbo Jet to fly ourselves back again.

Explaining in plain English what to do with all the dials, knobs, levers and switches scattered around the cockpit is all very well.  What we really want, though, is the location of the only two buttons we really need to press – the ones called Autopilot, and Satnav.


One two, one two, is this thing working?

I never put an out-of-office on my emails these days, because I’m never really out of the office.  But for some reason, when I’m doing what has now become my standard two-month summer stint working out of my French place, I do seem to have fallen out of blogging range.

This is partly for extremely tiresome practical reasons.  The sodding internet was down so sodding often this summer that what are supposed to be fresh, topical observations would have been stale and off-the-pace in the extreme by the time they made an appearance.

But it’s also for more personal reasons.  I am very genuinely working while I’m down there – every day, and for big chunks of most days too.  But I can’t say I’m enthusiastically looking for extra or optional work – I’m a bit like Windows running in safe mode, the core functions are all fine but the twiddly bits are lacking.

Anyway.  That’s all over now.  Winter draws on, pissing down all day today, PA plugged back in, re-approaching the microphone to check that it’s all powered up OK.  Roll on summer 2016 – but still a very long way to roll yet, I’m sad to say.