AIC questions 'curious' strategy and backs advice vouchers

The Association of Investment Companies has backed the idea of giving retirees vouchers for pension advice and questioned the Government's 'curious' approach to the guidance guarantee. Ian Sayers, director general of the AIC, believes the Coalition is going in the wrong direction.He has stressed the importance of involving financial advisers and advocated a voucher system, something recently proposed by Simon Nicol, pension director at Broadstone.Mr Sayers said: "We are in danger of creating something of a 'closed-shop' when it comes to the advice that we all agree will be essential."The current proposal is that the pension provider should be responsible for providing advice to those about to retire."This is the curious aspect of the Government's plans."On one hand the Government is giving individuals freedom to make their own choices about how they finance their retirement. On the other, they are restricting access to the guidance they need, which will be dominated, at least initially, by pension fund providers."{desktop}{/desktop}{mobile}{/mobile}He said it is hard to see how this approach can ensure the independence of the advice.He said: "Even if the obvious conflicts of interest can be managed (in fact, more so if they can) what incentives do pension providers have to compete on the quality of the advice they offer if they cannot benefit commercially from this?"The AIC have put forward a plan to the Government for a voucher scheme to pay for independent advice.Mr Sayers said: "This would be akin to the system of childcare vouchers, which is already well established."The Government would allocate a credit to each individual approaching retirement which would allow them to 'buy' advice from anyone suitably qualified."Giving vouchers will stimulate competition in the advice market. IFAs and others would vie for business on the basis of price and quality."He added: "There is already a pool of independent professionals, such as IFAs, who are qualified to provide this kind of high-quality, independent advice. Why not use them?"Mr Nicol said for face to face guidance to work consumers will need to be convinced of its impartiality and worth."It is clear that many may need persuading to take up the offer of guidance particularly if by being 'free' it appears to reduce its value," he said.Giving it a monetary value through a voucher scheme would be an effective way of doing this, he said. Broadstone has put forward this suggestion to the Government in its official consultation response.

AIC questions 'curious' strategy and backs advice vouchers

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