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Pension sector needs to believe in itself

Pension sector needs to believe in itself

The life and pensions industry is a sophisticated player that delivers huge benefits to its customers globally and has improved the lives of all the generations that have been born since its foundation.

There, I’ve said it. Far more people need to say it. For if you read the papers or peruse online media, you would get the impression that the industry, and pension in particular, are a danger that the public need to be protected from. And the worst part is that the majority of those giving this impression are professionals from within the industry.

Why is the majority of the life and pensions industry so convinced that they provide little value to society? Though they’d deny it, it is impossible to come to any other conclusion when you read their opinions. There is never any mention of the value of their services but a relentless focus on the charges as if that’s all that matters. Every time the fee issue comes up, the industry goes into convulsions as if they’ve all been caught with their hands in the consumer’s pockets.

With the Retail Distribution Review, the industry accepted that over-charging by some financial advisers was a reality but took from that they false conclusion that they all needed to be restrained and, in defiance of centuries of jurisprudence, they fell over themselves to agree with proposals that were focused on proving innocence rather than exposing guilt. Now it’s the provider’s turn to come under the spotlight, driven by auto-enrolment process and the industry is falling over them to denounce excessive fees without any evidence.

Undoubtedly, some fees are excessive but that is true of every business and product sold. Disclosure is supposed to sort that out, in order to allow consumers to comparison shop for financial products and services like any other thing they buy.

However, the self-flagellation of the industry over fees is feeding a view in the public sphere that any fee is excessive. We keep pointing out how much more you would have in your pension pot or investment product if they charges hadn’t been taken. No one ever tells you how much faster or flasher a car you could have bought, if the salesman wasn’t getting commission and the dealership wasn’t charging for the overheads. But financial services are different and they refuse to have the self-confidence to value their own work and unashamedly state the charges for it.

There are currently remedies for the situation where illegal charges are levied – which ultimately is fraud. Consumer law is full of protection already so it’s hard to see how any more regulations or rules are required.

The bottom line is that, like any form of appeasement, if the financial services sector keeps joining in the chorus and bashing itself in order to convince the politicians taking cheap shots that they are really the nice guy, it won’t work. Advisers, producers and their respective associations need to stand up for their own value. Unless we believe in the industry, we cannot expect anyone else to.

As an industry, Life and Pensions professionals should be far prouder of what they do and not succumb to every latest news story that flashes across twitter. We need to be confidant and assured that we have a lot to offer people in terms of their financial security and we should not be afraid to charge for that expertise. Otherwise, faith in the industry will continue to decline and the real losers will be the public.

Tom Murray

Twitter: @TomMurrayDublin or @Exaxe

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