On Wednesday, speaking at an annual dinner for London-based think-tank New City Agenda, Bank of England chief economist Haldane said that pensions are so complicated that like himself advisers are finding it increasingly difficult to make sense of them.
“To give a personal example, I consider myself moderately financially literate. Yet I confess to not being able to make the remotest sense of pensions.
“Conversations with countless experts and independent financial advisers have confirmed for me only one thing - that they have no clue either,” he said.
Hannant told International Adviser that although he agrees with the economist’s main argument that pension products are too complex, he argues that the point should not have been made by calling into question the competency of advisers.
“There are systems to make sure financial advisers are competent and they are competent. I understand the point that he [Haldane] is trying to make but it’s unhelpful to say that advisers who can help you don’t understand pensions. It raises the question: why would you go to see one?” said Hannant.
“It is counter-productive to make comments that might diminish trust in the financial advice profession.”
The director-general of the Apfa also revealed that the organisation has written to Haldane in a bid to clarify his remarks.
In the letter, Hannant points out that “it is counter-productive to make comments that might diminish trust in the financial advice profession”, especially as “unprecedented policy change” in recent years mean that people need access to financial advice more than ever.
“Financial advisers work hard to gain the appropriate qualifications and permissions to be able to help people make the right long-term financial decisions.
“Becoming a financial adviser requires a commitment to life-long learning to keep up to date with not only industry and market developments, but also changes to legislation and regulation,” reads the letter.
Hannant goes on to say that since advisers are authorised and regulated by the Financial Conduct Authority (FCA), Haldane’s comments may imply “the FCA is not fulfilling its role properly”.
Happy to meet Haldane at his “earliest convenience”, Hannant says that the two could discuss how advisers, the FCA and other government bodies can work together to ensure that people receive the financial help they need.
“Stop fiddling” with pensions
Hannant has also called on the British government to “stop fiddling” with pensions.
“We’ve had an announcement about pensions most of the last budgets and autumn statements. Although there are some essential things in the pipeline, any new policies should be introduced in the next four or five years so that people have time to digest them,” he said.
He argues that ministers should focus on “consistency” and work on simplifying the current pension system rather than continuously introducing a barrage of changes.
“The government should stop fiddling with pensions. A system may not be perfect but once there is a familiarity with it and people understand it. It becomes easier to deal with as they know what to expect,” said Hannant.