Actuaries, Insurers and a charitable streak

Neil Copeland

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It was George Bernard Shaw, another great Irishman, who said “The power of accurate observation is commonly called cynicism by those who haven’t got it.” I’m often accused of being too cynical by colleagues. But what other response can you possibly adopt when confronted by a front page advert in a major magazine from one of those awfully nice pension consultancy firms offering advice with no fees and suggesting that you ring a number to see if you qualify. Brilliant I thought , with, ok I confess,  just a touch of cynicism,– at last an actuarial consultancy which has actually applied for charitable status. On further research I found out there is also one of those terribly nice insurance companies with an equally generous streak.

Imagine my disappointment when a quick trawl through companies house records showed that no such charitable companies exist and suggested that perhaps my cynicism was well founded.

So how does this great innovation of “free” advice work then?

Well the one thing we can be sure about is that “there is no such thing as a free lunch”, or free advice in this case. Neither party involved are going to work their proverbials off on your behalf purely out of a misguided sense of altruism.

So what we really want to know is where’s the money coming from – I suspect they haven’t mastered quantitative easing for fees or found a way to access MP’s expenses so come clean. I assume the advert has been through the lawyers so presumably it meets required advertising standards but I find it surprising that the advertising material is silent on how the costs will be met. I tried to read the small print but couldn’t find any in their advert. A taster on the website tantalisingly mentions “subject to eligibility criteria” which does summon up the image of having to be at least 50 with both grandparents still alive to qualify. 

So, is it a bird, is it a plane? Is it bundled or unbundled? Is it a fee or for free?

The FSA and its predecessors have spent years trying to bring greater transparency to the advisory role in financial services, requiring disclosure of payments to advisors from providers. No IFA could nowadays pretend to offer “free” advice, indeed, even talking about it seems an alarmingly retrograde step.  It’s like we’re back in the 80’s aboard the De Lorean with Marty McFly – and what’s that tune blaring from the radio? “Won’t get fooled again?” I do hope so!

Neil Copeland

Post by Neil Copeland

Director, pensions consultant and adviser to trustees and employers on all aspects of work based pension schemes.