Over the past twelve months I have been a frequent contributor to an online IFA community. This evening I spent some time reviewing my postings and discovered that there are two ways to quickly stir up debate with other IFAs.
The two topics I have in mind are qualifications and fees.
On the subject of qualifications I have long held the opinion that AFPC should become the mandatory standard required before giving advice. Thinking back the five years or so to when I passed the FPC I can still remember how scarily simplistic they seemed at the time. There I was, fresh out of university with only a couple of months worth of work experience in financial services under my belt and I was the proud owner of a qualification that the regulator recognised as making me competent to advise the public on investments. Terrifying stuff! Needless to say I quickly moved on to complete the AFPC before letting myself loose on unsuspecting consumers.
If the majority of the IFA community are going to be seen as professionally equal to solicitors and accountants then they are going to have to try a lot harder when it comes to professional qualifications. The Certificate in Financial Planning (the new equivalent of the FPC) is by no means a stringent enough test of your technical knowledge or ability as an adviser.
Excuses for not getting higher level qualifications will come thick and fast. They are too time-consuming. I’m too old and experienced to need more exams. What is the point in getting more qualifications if I will be retiring in a few years time? My clients don’t understand what all those letters mean. It won’t lead to an increase in my earnings. I have experience and that is more important than qualifications! (Not on its own it isn’t!)
Excuses are always easy to find. Action and determination to improve is harder but more worthwhile.
The second IFA-baiting topic is fees. There is a place for both commission and fee charging financial advisers in the UK market. In fact, commission based IFAs are really important to ensure that the lower end of the market does not become even more financially excluded. But commission based IFAs are not really independent and not really advisers.
I would argue that there has to be a better tag for them than IFA. Independent financial advice does not mean a product sale with some advice wrapped around the edges. It means completely unbiased advice that might or might not lead to a financial product as the recommended solution. With a commission based ‘adviser’ you have to accept that the solution will involve a product and commission, unless you are willing to put your faith in their kindness and honesty.
So, as we start a New Year I resolve to keep debating these two topics even though I know they have the potential to wind-up many IFAs. I might also throw in a few more contentious issues, just to spice things up a bit.
What about suggesting that most IFA technology solutions are really a con, that product providers are getting really desperate as a result of haemorrhaging funds and that Wrap is one response to that desperation? We also need to discuss how TCF runs the risk of becoming the financial services equivalent of the Human Rights Act; used as a general excuse at every possible opportunity.
There will be lots to debate and lots of ways to wind up other IFAs during 2007. I can’t wait!
Martin Bamford is director of Informed Choice.
The views expressed are those of the author and not those of the company he represents.IFAonline
Slow progress in improving diversity
Share purchase deal with assets of £28m
Came into effect in January
Three examples of compensation rule issues
Buying in baskets