Like many, I often find myself in a reflective mood towards this time of year, and even for an industry that seems to be a permanent victim of the old Chinese curse "may you live in interesting times", this year has certainly given us a great deal to reflect on.
However, rather than a broad brush, I will focus on the RDR. One of the most interesting aspects of the RDR has not been the proposals themselves, but rather the industry reaction to them.
Attitudes to fees are one such example, with positions ranging from “fees good, commissions bad” to “keep the status quo”. Whilst some of the best firms in our industry do operate on a fee basis, we might do well to consider the FSA’s remarks in section 7.12 of the Final Notice given to DTWM in 2004.
Quality is driven by much more than a pricing model. Claims that small advisers will be driven out of business by large banks and insurance companies have also been a persistent theme. Whilst large institutions could certainly do more (and in some cases are doing more) to make the most of their distributive potential in investments and pensions, little I have seen convinces me that this will, in the main, come at the expense of small advisers.
There are certainly many consumers out there who would like to buy their financial services from a major institution with its accompanying strong brand messages; however, in many cases these will be different people who prefer the services of an “independent specialist” or “local adviser”.
The primary advice debate has moved on as well, with Stephen Bland’s remarks at the Future of Distribution conference greatly encouraging, particularly with regard to “assisted purchase”.
Productivity remains a significant problem within our industry, and four to five hours (figures from our own research) is just too long for a £7,000 ISA. Improving productivity will require many factors to work together, but the regulator providing comfort (not necessarily rule changes) to larger institutions around helping consumers answer key questions like “should I invest?” and “which fund should I choose?” certainly plays a big part. This needn’t be at the expense of quality, for whilst complex, multi faceted advice requires the time and judgement of a skilled adviser, other solutions are possible in simple cases.
To anyone who mentions decision trees here, I would simply say that the state of technology now allows a completely transformed simplified purchasing experience.
It only remains to wish you all a happy Christmas and a prosperous New Year.
Simon Farrant, APFS Chartered Financial Planner, is head of financial planning at Distribution Technology Limited.
The views expressed in this blog are the individual's own and not necessarily those of the company he represents.IFAonline
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