Advisers will be classified in the future according to the services they provide with more qualifications required at the high net worth end, FSA director of retail policy Dan Waters has hinted.
Speaking at the Securities and Investment Institute Annual Conference 2007, Waters said a number of themes were emerging from discussions on the FSA Retail Distribution Review which is due to be published on 27 June.
Waters said a key theme behind the review is a wish for the market to be segmented according to the services supplied. The five industry working groups supporting the review are also united in believing higher standards of behaviour and competence are needed.
Waters says: “In line with the thinking of other industry groups, this group has suggested that a wider range of services may be more appropriate in today's world, with advisers differently skilled but suitably qualified according to the services supplied.
“This would start with fully-fledged financial planners offering advice typically to the higher end of the market where complex portfolio advice is needed, to advisers operating at a more transactional level for consumers who have more focused and possibly less comprehensive portfolio requirements, through to those advising on simpler products through some kind of simplified advisory process.”
He said these classifications would sit above a widely available generic advice service.
Waters says the segmentation of the advice model implies a higher minimum standard of professionalism particularly at the more affluent end of the market, and more rigorous continuing professional development for all advisers.
He added that while there is a role for regulation in delivering these standards, the industry itself might develop and implement a more coherent, and broader-based, standards framework through its own professional bodies, such as the SII.
“A good measure of whether such a shift is successful might be the extent to which high quality, young graduates would be attracted to financial planning as a career, as they are for example in the United States. At present we seem a long way from that position,” he adds.
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