Why you shouldn't fear the Money Advice Service

The launch of the government’s Money Advice Service (MAS) has met with a volley of criticism from some advisers but IFAs involved in shaping the project believe it can benefit fee-based planners.

Last week, the Consumer Finance Education Body was rebranded as MAS, and plans were outlined for it to adopt a more proactive approach to helping consumers engage with their finances.

Some advisers were concerned that MAS, which is being promoted by the Financial Services Authority (FSA), would become a threat by encroaching on their market.

However, advisers Julian Sunley and Darren Lloyd Thomas (pictured), who have both been involved in promoting the service to companies, argued IFAs have little to fear.

Sunley (above) , director of Hampshire-based Sunley Financial, said the service was targeted at a different audience to advisers’ clients.

‘They [MAS users] are mostly 18 or 19 and in their first job,’ he said. ‘Their biggest issue is getting car insurance, what an AER is, and not to dismiss a letter about the company pension scheme.’

Lloyd Thomas, of Pembrokeshire-based Thomas and Thomas Finance, agreed MAS would be advising mass market clients with needs that could not be served by a fee-charging planner.

‘We’re financial planners – we should be dealing with people that will pay fees,’ he said. ‘We should not be dealing with the mass market and people who we tell to get an ISA or pay into a pension scheme.’

Steve Stillwell, MAS acting head of strategy, argued the advice given to users was complementary to advisers’ work. ‘It’s a stage before the sort of things IFAs do,’ he said. ‘It’s more around borrowing or when people have their first child or are buying a house, this is before they need to move on to a regulated IFA.’

Both Lloyd Thomas and Sunley pointed to the benefits advisers could reap by working alongside MAS. By presenting the service to companies, they said they had generated leads and boosted their standing among potential corporate clients.

‘I did it to brush up on my presentation skills,’ said Sunley. ‘I have a couple of corporate clients and it looks good if I can say I’ve given presentations to British Gas and Honda.’

Sunley added that while it was against the rules to give advice to people at the seminars, they could generate leads. ‘If someone did want to talk about financial advice I couldn’t talk to them that day but they could ask for my card and then give me a call on another date,’ he said.

Lloyd Thomas said generating new clients was his explicit aim when he first became involved in consumer financial education initiatives three years ago.

‘I was involved in [FSA consumer initiative] Money Made Clear in 2008 and when I did the training, they went round the room and asked why everyone was there. Everyone said “I want to give something back to the community,” and I said “I’m here because I want to get some leads”. The guy said that’s the reason that everyone is doing this, to try and pick up contacts.’

However, Lloyd Thomas warned that MAS could pose a threat to generating corporate business for advisers who weren’t involved.

‘When you’re a financial planner, a good way to generate leads is through presenting to employees at a company,’ he said.

‘There is a bit of a danger from the point of view of an IFA, where you can get in with employers. That ground has been taken away because the FSA will provide this service for free.’

But Stillwell argued MAS’s work could help boost client numbers for IFAs. He said anecdotal evidence suggested those that had used MAS were more likely to seek regulated advice.

A further adviser concern about MAS has focused on its funding from the FSA levy. Not only is the regulator treading on advisers’ toes but it is charging them to do so, some IFAs have argued.

According to MAS, in 2011/12 it will receive £43.7 million in funding from fees raised from FSA-regulated firms.

Keith Churchouse (above), director of Surrey-based Churchouse Financial Planning, argued that did not represent a heavy burden for advisers. ‘I have to say I have seen the charges recently and they are not very much,’ he said.

He added it was worth paying for the service as it could create more wealthy people who could become clients in the future.

‘At the end of the day, we all want wealthy clients and the more you can educate people about finance the more they can build wealth.’