What are your thoughts on Thoresen's Generic Financial Advice interim review, particularly regarding the news that it could cost the Government and the industry anywhere between £40m and £80m? Do you think protection will be overshadowed by other products such as pensions and mortgages?
Phil Hull, Sesame
Any initiative that makes financial products available to a wider audience has to be applauded. In this respect Thoresen's review is a positive step. It is an opportunity to educate and empower the public with key financial information, thereby providing a springboard for consumers to seek professional advisers to assist them with practical solutions to their real financial needs.
The overarching problem is the cost and how it will be funded. Unfortunately, it is those disenfranchised people who are most in need of financial advice that are the least likely to be able to afford it. However it is dressed up, it will be consumers who ultimately pay: if the Government funds it then it will fall to the tax payer; if the providers fund it then policyholders will pay.
Looking at the bigger picture, it seems appropriate for this to be funded by the taxpayer, but does the Government have the track record to deliver on this? The dichotomy is that the industry has the expertise, but little desire to fund it, whereas the Government has the desire and the funding, but lacks the expertise.
Meanwhile, this comes at a time when the Government is pushing everyone to take control of their pensions, and, therefore, would want to see pension provision at the top of the agenda for generic advice, but most people's needs are more immediate. There is a possibility that if it is Government-led the focus will be on pensions, which although important, is not an immediate need for most consumers.Stuart Bayliss, Annuity Direct
The provision of generic financial advice, given the low level of financial understanding, seems to me cheap at up to £80m even if the Government does require the industry to pay half. How the information is conveyed and how improvements in understanding are measured is vital.
Financial activity falls into three simple areas - borrowing, saving and protection. The dangers here are obvious.
Borrowing is principally about mortgages as everyone wants one. Saving is principally about retirement and pensions as everyone needs one and the Government needs society to need one. With protection, while it is obvious to most how important it can be upon claim for flood, death or accident, it is too easy to believe "it won't happen to me" and is frequently referred to as 'dead money'.
Providing generic financial advice adequately positioning the balance of need and risk for each pound available to the financial market will need to be subtle and convey a key message that people live in an over-mortgaged, under-pensioned and under-protected society.
Already we have seen providers ask for a say in how their money may be spent. That participation will be great as long as there is a shared understanding of what generic financial advice should be about.
Andy Couchman, Bank House Communications
Will protection be swamped by pensions and mortgages if the Thoresen Review develops as some think it will?
Let me quote what Management Today said about the proposed takeover of Resolution in late October: "It's not easy to get excited about life insurance. It's just not a very thrilling business".
Unfortunately, that is a sentiment shared by many of our customers, many providers and even advisers. We market 'sensible', 'careful' and 'peace of mind', which are slightly old-fashioned virtues but are nonetheless important. They are just not very exciting, never top of anyone's wish list or the sort of thing people boast about at parties.
So yes, I do fear that Thoresen will lead to the protection sector contributing more to the cost than it gets as benefit, but if we want to change that, we have to act smart and fast. That means making protection sexy and making it attainable. For the mass markets, it could mean moving away from rate-driven products, 30-plus page applications and preferred underwriting by stealth and back towards solutions that are easy to understand and easy to buy at a fair price.
Failure to do that, and Thoresen could become just another tax on our industry. And that is not what the review is about at all.
Robin Carr, Bright Grey
One of the fundamental aims of generic advice is to provide a "preventative service to help people avoid getting into financial difficulty". Protection is core to this. There is little point sorting out savings and pensions strategies if consumers do not have protection in place to ensure an individual's financial planning and lifestyle is protected if things go wrong. Even those with very little savings power may be able to afford the protection they need to prevent them from financial catastrophe if their health fails or the earner dies.
Until recently, the emphasis of the review has been on pensions and savings. This concerned us, but we are reassured that protection is at last being included. However, we remain cautious about how generic advice will be delivered for protection. Any notion that people in lower socio-economic groups do not need the sophisticated advice available to the wealthy is wrong. If you are not financially empowered, premature death or illness can devastate the family. It is the less well-off who need protection advice the most.
It looks like the provision of generic advice will cost a substantial amount, but people need help to prioritise at different times in their life. And if the end result is better financial education, and this knowledge leads to better financial planning and more value being placed on protection, then it has to be a good thing.
