Judging by the volume and depth of coverage of the Retail Distribution Review in your August edition it seems as though the Financial Services Authority has already achieved one of the discussion paper's key aims - to spark a debate. Will it achieve all of its other aims? In its present form we think this is unlikely, hence the debate becomes a very meaningful one and we urge advisers to take up the FSA's invitation to respond to the paper's questions.
Shortly after the paper was published, we surveyed almost 600 financial advisers and 44% said they would be General Financial Advisers if the paper went through as it is. Many more said they would need to make radical changes to their business to adapt and survive.
Those 44% would be banned (under the proposals) from having the
status of independence, despite choosing from the whole of market, and there is speculation over the longevity of the General Financial
Adviser category. Many advisers believe they would get squeezed out by market forces created by the new regulation.
Surely it would be counter-productive to the availability of independent advice, and further dilute the independent label, to endanger the generalist adviser by reducing their status just because they work on commission. On the questions of whether the introduction of primary advice would expand the market for advice and benefit consumers, 82.4% and 77.5% of our survey respondents, respectively, said no. Let's remember these people understand advice and the consumer.
We all want continuously to improve our industry and the financial well-being of consumers, but in making improvement let's be sure not to throw the baby out with the bathwater.
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Has run Cautious Managed fund since 2011
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