Apart from his longevity in this industry, one of the great things about Steve Bee is that he has always been willing to take on the role of agent provocateur.
In the decades that he has been a commentator on pensions and other financial subjects, at Prudential, Scottish Life and now as director of Jargonfree Benefits, he has never shied away from saying the unsayable.
While others relish the mantle of being treated as industry elders simply by virtue of their length of service, Steve continues to gently lob intellectual grenades at his audiences, forcing them to reconsider and look afresh at issues they might otherwise take for granted.
One of his most recent examples is a column in Money Marketing in which Steve confronts the question of how the industry can deliver a service to 18 million people – the number the FCA estimates could have benefited from financial advice in the past 12 months.
Steve chooses to focus his answer on the controversial topic of how much advisers are charging for financial advice. He writes: “The relatively high costs of taking financial advice and legal advice being broadly equivalent must surely act against financial advice becoming widely available to tens of millions of people a year.”
Given his position as an industry maverick, I hope Steve won’t mind if I add my more modest thoughts to his own comments.
Need for advice
The first concerns his observation about the level of need for financial advice. It is not the case all potential beneficiaries of financial advice, who number in excess of 18 million people, want the same, highly complex level of service.
Some need help with a basic transaction, others need generic advice. Many would be satisfied with online or telephone-based services. Not all of it needs to cost £300 an hour, or even a fraction of that amount.
My second point relates to his comment about the medical profession – he suggests “very few people would see an online consultation with an algorithm as being satisfactory.”
Equally, many of the functions of health provision are now either automated or performed by professionals whose annual salaries are in line with the national average or even below it, rather than at senior consultant level.
A couple of months ago, I came off my scooter and fell on my shoulder, rupturing a ligament. Happily, aside from an unsightly and, sadly, permanent lump on my shoulder, my recovery has been good.
While at my local hospital’s minor injuries unit (MIU), I was triaged by a senior nurse practitioner on a band six salary – an initial 15 minutes at a top hourly rate of £19.06. My jacket and upper clothing were cut off by a nursing assistant – ten minutes at £9.63 an hour— during which time she took and recorded my physical observations.
I was wheeled to the X-ray department and back by a porter – ten minutes at £9.03 an hour – and X-rayed by a radiographer – six minutes at £17.17 an hour. My subsequent consultation with the nurse practitioner, in which she explained the nature of my injury and its management, fashioned me a sling out of foam and loaned me an NHS pyjama jacket, took a further ten minutes. I was out of the MIU in just over an hour.
Where were the highly-paid specialists in all of this? The X-ray results were initially interpreted by the radiographer and the nurse. An image was sent electronically to University Hospital Southampton where it was reviewed at a so-called ‘virtual clinic’ by a small trauma and orthopaedics team of two or three consultants and registrars – hourly rate between £29.74 and £47.99 – for all of five minutes.
Two days later I received an automated letter telling me the injury was minor and what the likely prognosis would be. That would have cost about a fiver.
Of course, the NHS being what it is, there are masses of other invisible costs involved in treating my injury. But my key point is that responding to medical needs today is unrecognisable from a 1960s-style Carry On Doctor model of care, where patients spent weeks in hospital recovering from a bunionectomy.
Finally, I’ll point out Steve makes the link between accountants, lawyers and financial advisers, to discuss relative earnings – and to suggest that the latter’s costs may be too high. This type of comparison is commonly seen in such discussions.
If we accept that an algorithm – or automated financial advice – is a likely outcome of technological progress, then perhaps the link is a false one.
It is not impossible to imagine most financial advisers being supplanted by computer software with only the most complex functions performed by live human beings – and, for the most part, not particularly well-paid ones at that.
Far-fetched? Does anyone remember draughtsmen, responsible for producing all those wonderful technically-detailed drawings of aeroplanes, ocean liners and automobiles right up to 20 years ago? Gone, replaced by twentysomethings with access to a CAD machine. The same can be said about scores of other 19th and 20th century professions that have all vanished.
It may be that, rather than Steve worrying about whether financial advisers are charging too much, the real issue is whether they can survive in their present form for another 20 years. Now that would be true iconoclasm.
Nic Cicutti can be contacted at firstname.lastname@example.org