Calm down

Before everyone gets too excited let’s examine the practicalities: 1. IFAs can’t access ETFs directly as the ETF firms only deal with Stockbrokers. So it’s a bit of a nonsense to charge a client for advice, send him to a stockbroker who will then charge him again. So the dear people at the FSA need to look at the nuts and bolts rather than just theorise in their Ivory Tower. It may well be that Platforms may offer these anyway. 2. Structured Products. Indeed! With all the bru ha that these have recently engendered I can just see the press headlines: “Regulator encourages advisers to flog dodgy products”. Whatever else they may be at No 25 I don’t think they are masochists. 3. As to Chris Cummins’ comment concerning whiskey – I’ll certainly drink to that – what a terrific idea! 4. As to Investment Trusts – well decent investment IFAs use these anyway. Much as I am an admirer of Chris I don’t always agree with him. On this occasion I think he is half right, but not for the reasons he states. As Robert Reid has said often – there are too many advisers who are not totally competent to advise on all investments and in theory there is nothing at all wrong with the FSA statement – it is the practicality that is lacking. Indeed why not go the whole hog and let us deal in individual equities – CFP’s in the USA are permitted to do this and besides if the Regulator truly wishes us to be whole of market this is a huge omission. As far as research is concerned – do you think that stockbrokers do all their own? Of course they don’t it is bought in. IFAs can do that too. In the last analysis I think what Chris is trying to say to the FSA is that they are being silly and with that I can certainly concur.

Posted by: Harry Katz

Cloud Cuckoo Land

Canary Wharf is becoming pure Ivory Tower land. Just because something exists it must be worth considering, so the building blocks become more important than the rationale of the structure itself. I have looked at ETFs and my reaction is that they are low cost, high risk, short term tracking devices - quite similar to betting on horses. Because one is tracking an Index it becomes important to research the underlying potential of the Index and be prepared to manage the investment when it turns downwards. Considering the considerable range of ETFs this would become a full time job in itself. I would suggest that managing ETFs is at least as complex as managing a range of equities - which is one very good reason why IFAs should not do it - it would leave too little time for the other essential aspects of advice. And has anyone completed any significant research to determine whether the risk levels of ETFs produce a commensurate level of return. If there is no proof of improved investment return why is the FSA trying to push them. If there is evidence of improved return, rather than merely lower cost, then the market will demand that IFAs become competent in them. The FSA appears to reacted to each new idea like a 6 year old child - all excitement and no thought. Isn't there anyone in the FSA management hierarchy that can encourage the practice of brain on before opening mouth. And one last thought - to what percentage of the population does the FSA believe that ETFs would be relevant? The ever shrinking portion to whom IFAs are now providing investment advice, or most of the population which I believe was one of the aims of RDR. The time and cost of managing ETFs would almost certainly preclude the latter.

Posted by: Glen McKeown

Calm Down 2

I'm with the FSA on this - their proposals are envigorating and empowering and increase the scope of what a good adviser is able to do. Rather than limiting advisers to retail financial product packages, why shouldn't they be able to advise on what the client can go out and buy for himself anyway? Take stock brokers or even fund managers, do they do the same degree of research on every available stock worldwide? No, they employ a filtration system (mostly bought-in external research anyway) which quickly reduces the universe which they could consider to manageable proportions to be looked at more closely based on delivering the investment proposition which they have advertised. Why should it be any different with 'Independent' Financial Advisers?

Posted by: Stan Kirk

RDR will kill Independent Advice Twice over

RDR will kill Independent Advice Twice over If the Stasi don't get you with level 4 then they will get you with their new definition of independent advice! First they hit 10,000 IFA who fail to get to level 4 then they make independent advice so wide it will act as a magnet to consumerists in search of a fast buck! Can you really advise on the whole market? It proliferates your liability and you will need to earn much more in order to cover the risk of the big bad unaccountable FOS. Restricted Advice will be the only route post RDR. Post RDR as an independent adviser if it can be shown that ANY product(s) would better meet the clients needs you would need to advise them that was the case, and this is from the whole world of financial products, deposts, National Savings etc etc etc. I can see the claims handling companies circling like vultures as the FSA wild dogs hack away at what remains of the wounded independent adviser! The FSA needs to be stopped before they destroy all in their RDR path!

Posted by: SIMON MANSELL

FSA opens its ragbag again

I do so love these blogs! There is so much vigorous comment and one hopes the FSA staff can learn from it. But a frightful thought came to me... Perhaps none of them read blogs and we are hurling our thoughts into a black vacuum. So could I suggest when we see a particularly good comment, we print it out and mail it to Hector Sants et al at Canary Wharf plus a set to the chair of the appropriate Parliamentary committee trying to keep tabs on FSA policies? That way someone with influence would get to see views (possibly a deluge of them!) and think about the issues from our perspective.

Posted by: Orlando Furioso