1. Do you think the ‘death' of independent advice is accurate or exaggerated now RDR is here?
I think it's been exaggerated by firms who are going to receive restricted business models. A year ago when the IFA Centre was set up, there was a lot of discussion about it. My fear was everybody would believe the hype that it was going to be impossible to be independent and no-one would stay independent, which is part of the reason I've decided to fight the corner.
I think as time has gone by, people have become more aware it's not such a difficult thing. If you're already an IFA, to stay being an IFA isn't such a big leap in the new regime compared to some of the other big leaps in terms of adviser charging and qualifications.
2. What are the potential benefits of being seen as an independent adviser?
I think restricted now covers everything that does not give the adviser a completely free hand to go wherever the client takes them. The advantage for independents is the client's needs can take me anywhere, it's not about the firm or what the firm has decided or eligibility criteria.
3. What questions should advisers be asking themselves when looking to make the decision as to whether they go independent or restricted?
Some advisers thought it was worth running both advice models in the same practice and I just don't see any logic for that. If you've done the research for a client to offer independent advice, I don't understand why you wouldn't re-use that research, systems and processes and offer independent advice across the practice.
I think it's also confusing from a client point of view because of clients who can move between independent and restricted advice. Typically it's been defined around wealthier clients getting independent advice and the less wealthy, the mass-affluent; the starter investors getting restricted advice. I had a real example a client once who said they had £950,000 to invest, but had a £900,000 mortgage.
On one level you'd say, they'd need independent advice because of the amount they had to invest, but by the time they'd paid off the mortgage, they had £50k to invest and would look more like a restricted client by the criteria firms are setting out. That doesn't seem to make any sort of sense.
A lot of the debate has been around if independent advice is more complex and costly to deliver. It's up to the advisory firm to put in place systems, processes and cost efficiencies that mean it is affordable to deliver advice.
4. What do you think are the growing areas in terms of advice opportunities?
I think advisers can place themselves more at the heart of helping clients understand the impact of financial markets on their investments. [A client] will be a better investor [they] are not tempted to cash in all their chips because the market is a bit scary. You can coach people into good investing behaviour, and that has a long-term value because that keeps people invested and working towards their goals.
Auto-enrolment will be a big opportunity because it creates a lot of questions. Existing clients will wonder whether to go into it or not and how it affects anything else they're doing. Clients who are business owners will have questions about their workforce. Long term it brings lot more people into a world where they need to understand what's happening to their money and how to invest it. That increases the market dramatically and is a huge opportunity for firms who have a good process in place for being able to work with those clients quickly and easily.
Another issue is where firms say ‘we just do financial planning [not transactional work]. I had someone query this. It was quite hard to find an IFA who would just talk to them about the pressing question of the moment and who wouldn't enforce going through a full financial planning exercise. As it happened, that client was very wealthy and over time I think she will buy into the idea of having a financial plan. However, she originally asked the question, ‘I've been written to about my pension fund and I would just like some help.' How many advisers would say, I'll just help with the pension?
Talk to potential clients. You don't know they haven't got trust funds or a family business. Unless you open the door to what might seem like a small piece of work, you'll never find out about it.
5. Has there been enough support out there for advisers looking to develop their advice proposition in the run up to RDR?
I think a lot of the support has been attached to vested interest. You go to product provider meetings who say they'll give transitional support but you've got to use their platform. There's been a market in transition and management consultants of RDR. I think while that can be good value, it's at a price a lot of the smaller firms couldn't necessarily pay.
6. You've said that you want the IFA Centre to be the ‘only' body of the IFA community. Can you tell me about the body's activities?
The strapline is ‘independence matters to us, because independence matters to you.' Everything I do is around helping [members] stay independent. Some of the work I do is around events, helping people understand the rules, myth busting, helping people with translating what the FSA would like us to do in terms of platforms and panel use, how to evidence independence and practical stuff such as expectations around CPD and statements of professional standing.
At a higher level there's responding to consultations and speaking up for the independent adviser in [cases such as] Arch Cru. Now it's very clear we're the only organisation speaking for independent advisers.
Gill Cardy's CV
• Gill has over 25 years' experience in financial services. She became an independent adviser in 1996 when she joined Fiona Price and Partners IFA, and established Professional Partnerships from 1998-2007.
• Gill is the first woman to win Money Management Financial Planner of the Year award (2002)
• From 2004-2009, Gill sat on the FSA Smaller Businesses Practitioner Panel as IFA representative
• Gill founded the IFA Centre, a trade association for independent financial advisers in 2011.
• The centre launched an independent financial adviser directory in November 2012.
• She holds an MBA from Nottingham University, is a Chartered Financial Planner and Fellow of the Personal Finance Society.
Categories: Better Business