Reading about M&G’s troubles, I can’t help putting them down to the obsession with running an expensive fund platform. But what do I know?

What I do know about is 21^st century advice – something I believe is built on the shoulders of giants, such as the Man from the Pru.

These advisers door-knocked, cold called and worked evenings to get families started on a lifetime of saving and self-preservation.

So, why is offering advice so hard these days?

It’s a real shame such a historical institution as M&G cannot remain committed to solving the challenges of advice regulation while making a profit.

It’s a real shame such a historical institution as M&G cannot remain committed to solving the challenges of advice regulation while making a profit

There remains a huge advice gap opportunity for any company who can de-mystify the world of investment and help the man in the street access the wonder of compound interest, just like they used to.

Providing advice seems to terrify those around the board table. Is it impatience from shareholders, short termism on the part of directors or just fear of liability? Probably all three.

I have previously voiced support for a simplified advice regime which could be a gateway to the markets for low value investors taking advice.

To those providers pondering on leaving or entering the advice market, here are my suggestions for making it work:

• Reduce the hurdle of cash savings: Three months spending in cash can take five to seven years for people to save and it is not mandatory as emergency provision. This restriction serves the anxiety of compliance staff more than it serves the interest of investors, and it can be done better.
• Know the outcomes of what you are offering: Charges need to be competitive, and easily justified. Funds need to be liquid, transparent and dependable in their expected returns. Projections need to be realistic and not woefully cautious.
• Think about the liabilities: How will they arise? How is the compensation calculated? Which investors complain? What triggers the complaint? By looking at this in full detail, you can inform the quality of your messaging and have more investors with confidence.
• Get the box tickers out from their desks: Give them sales training, teach them to advise, make them talk to clients.
• Focus on service: Of £198,798 complaints to the Financial Ombudsman Service in 2023/24, £1,459 (0.7%) of them were against advisers. Why fixate so much on the nuances of suitability? With a simple and reliable product proposition, 90% of advice can be algorithmic – making it both efficient and profitable.
• Know your target market and sell to them: Financial services have been a huge contributor to prosperity in the UK. We should believe in the benefit of what we do.

The regulation of financial services in the UK has been a been a huge success in improving the rights and security of consumers. But it is nothing to fear. Our faith in delivering advice to all must endure alongside the products and the markets that will deliver for investors.

Greg Neall is chartered financial planner at Wake Up Your Wealth

HUNDREDS of thousands of retirees are set to pay tax on their state pension for the first time next year.

This is due to a combination of hefty state pension rises and frozen tax thresholds.

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It is expected that more than 300,000 pensioners will be told that they need to pay tax when the state pension rises by £473 in 2025.

The figures released this week have confirmed that the state pension is now expected to rise from £11,502.40 to £11,975 per year under the triple lock.

With tax thresholds frozen until 2028, this increase will drag even more pensioners into paying tax for the first time, it has been warned.

This is because the total annual amount of income they receive will be more than their personal allowance.

The allowance is the amount of money you can earn before you have to pay tax on your income.

Under the current rules, this is up to £12,570 each tax year.

It was previously expected that around 140,000 pensioners would receive a letter for the first time this year.

But because of the proposed increase in the state pension, more than 300,0000 people are now likely to get one.

Alice Haine of Bestinvest said: “Add in frozen tax thresholds, with the full new state pension gaining ground on the standard personal allowance of £12,570 and pensioners are edging closer to the point at which their state pension income becomes liable for tax.

“Retirees already receiving a higher state pension may already be paying tax on the benefit, while those receiving a private pension income will see more of that swallowed up by tax.”

Helen Morrissey, head of retirement analysis, Hargreaves Lansdown also pointed out that while rising state pensions are good news, the tax threat is “a hidden sting in the tail”.

She said: “While the full new state pension is currently set at £11,502 and is set to get close to £12,000 from next April it’s conceivable that in the next two years we could see it breach the £12,570 threshold and see pensioners landed with a tax bill.

“It’s also worth saying that many pensioners on the basic state pension system receive more than this as they get a top-up to their income in the form of the state second pension so receive a tax bill even if they have no other income.”

Many pensioners have other pensions – personal or workplace – and HMRC will usually take the income tax due through these pensions, Helen pointed out.

She said: “Those pensioners wholly reliant on the state pension who face paying tax will receive a simple assessment letter from HMRC telling them how much they owe.

“There have been concerns about pensioners being chased for small amounts of tax though HMRC has said they would not look to chase tax amounts that would cost more to collect than is actually owed.”

Why is this happening and is there anything I can do to avoid it?

High inflation rates mean more people in work are getting pay rises to try and keep pace with rising prices.

However, with income tax bands frozen, it means many are being pushed into the next tax bracket.

Laura Suter, director of personal finance at AJ Bell, previously told The Sun: “Pensioners looking to reduce their tax bill need to think about how they can maximise their tax-free income.

“For example, any withdrawals made from their ISAs will be free of any tax. so they can use that pot of money to boost their income without impacting their tax bill.”

An ISA is a type of savings account in which you can save up to £20,00 a year tax-free.

Laura also suggested that couples can organise their finances so they ensure they are each making use of their tax-free allowances, which might involve moving money or assets between themselves.

Helen also added that pensioners might want to use some of their pension to top up their income.

She said: “Most people can access 25% of their pension as a tax-free lump sum so they may decide to use this to top up their income without pushing up their tax bill.”

However, she also warned that pensioners below the personal allowance are going to find it increasingly difficult to avoid paying income tax in the coming years.

The finance expert added: “A full new state pension hits just over £11,500 per year and even relatively modest 3.5% annual increases would see people pushed over the threshold by the time the threshold freeze ends.”

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