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Estimates of the number of advisers set to leave the industry due to RDR have been two-a-penny in recent years. But the FSA’s latest figures have raised a few eyebrows...
New estimates from the financial services regulator suggest nine in every ten advisers practicing today will meet all the requirements set out in the Retail Distribution Review (RDR) by the end of next year.
Based on an as-yet-unpublished survey assessing the current status and intentions of more than 1,000 individuals, the FSA said it expects 91% of advisers to remain in the industry and continue to see clients.
The figures are significantly more positive than those published elsewhere, and also suggest a shift in momentum since the last time the regulator conducted a similar poll in 2010.
Last year, the FSA said as much as 18% of the industry intends to leave the market as a result of the RDR’s requirements, including those on qualifications.
However, its latest figures found just 5% of advisers do not intend to reach the new qualification level, largely due to their intention to retire, leave the industry or stop advising on retail investment products.
A further 2% intend to qualify but do not know when they will complete their qualification, the FSA said, while another 2% have either not given any consideration to taking an appropriate qualification or have not made a firm decision on whether to do so.
But advisers said they were unsure what to make of the FSA’s findings.
Michael Fallas of Focus IFA in Buckinghamshire, said the figures were meaningless because the real impact of the RDR will only be felt after the rules have come into force.
“This sort of justification is typical of the FSA,” he said. “The question is will consumers accept the effects of RDR and be prepared to pay fees or fees deducted from the product at a level that makes the business worthwhile?
“If not then 2014/15 could see many leaving the industry, qualifications or not.”
The FSA’s figures were published in an attempt to rebuff MPs’ concerns about the extent of potential exits from the sector.
Members of the Treasury Select Committee (TSC) reviewed the impact of the RDR over the summer and recommended that the FSA delay implementation of the rule change by 12 months, over fears consumers would be left unable to access advice due to an adviser exodus.
But in its formal response to the TSC last weekend, the FSA said adviser preparedness was high.
Its response states: “We share the committee’s concern about the impact of the RDR on the availability of advice and the extent of potential exits from the sector, particularly by independent financial advisers, as a result of the qualification requirements.
“We have carefully considered the option of delaying the RDR in order to allow advisers more time to qualify. The evidence from our latest survey is that...at summer 2011, 91% of retail investment advisers are either already qualified or expect to qualify by December 2012 with another 1% expecting to qualify after the end of 2012.”
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advisers in 2013
Some 50 years ago(only seems like yesterday) one of the subjects taken at college was statistics. I remember our Tutor informing us that statistics can be manipulated to show what ever you wanted and usually they are lies, more lies and more ....lies. I cannot accept that the results of surveying only 1000 advisers really gives a true picture when we are told there are 30,000 IFA,s in the industry. Why not ask all IFAS. I expect the cost would not be too much as it could be done by email. Anyway the cost could come from reducing bonuses and the cost of first class flights/christmas parties
Posted by: terry
advisers 2013
I think the FSA should get off the crack there is no way 90% will still be around 1/1/2013 as IFA's my guess is 60%
Posted by: robert Lundon
Fairy tales
The FSA seem to be assuming that all those taking exams will pass. They further assume that the public will be duped by CAR and that no advisers will become unprofitable as a result. The FSA definition of "Independence" if enforced will ultimately result in far more road kills. I doubt if sufficient clients will want to pay the charges IFAs will need to charge in order to remain "Independent" without a significant reduction on the supply side.
Posted by: John Blackmore
Exams not the issue
Most IFAs should be able to passs the exams. That's not the issue. The issue is the commission ban. The commission ban means that the IFA business model is unsustainable...
Posted by: Ken Durkin
I agree with the FSA
I have to say that in this case I do thing the FSA are more or less right.
Posted by: Harry Katz
IFA's? More likely Restricted!
Having sat through an FSA meeting regarding the RDR and its effects in practice with a really unpleasant FSA supervisor who was actually relishing the fact that he would be visiting to check if those that said they were IFAs were actually giving advice on all world wide available products for 'all clients for whom they MAY be suitable..', I suggest that to say we are IFAs would be a red rag to the FSA bull; just asking to be shredded. I cannot see how most of us will be able to offer that service - assuming we wanted to, as we would not be able to afford the time, and clients would definitely not want to pay for the time either.
Posted by: Lyn
FSA Supervision
Lyn, surely the operative word is 'May' Which calls for an opinion. as this is personal it cannot be challenged. In my opinion the general financial stratus of the client was. Further being an FSA Supervisor does not entitle the holder to be rude or unpleasant. Confront the bully, call him/her a bully and order them off your premises. then phone the FSA and make a complaint. You may well be very surprised with your level of success The FSA do not have the authority to employ such jobworths.
Posted by: M J Winfield
QUICK ANSWER
How many advisers will there be in 2013? Answer: Not as many as the number of people telling us how to do our job at the FSA.
Posted by: Keith Jayne
FSA consumer mailing
The FSA say that it's intention is to educate the public of the impact of RDR. That begs the question; Will the public then have responsibility for this new knowledge? Having handled more than 700 complaints over the last 10 years the FOS has consistently argued that the mailing undertaken by the FSA regarding endowments did not equate to customer discovery.
Posted by: Caledonia Consultancy
Wrong Question
The question should really be how many advisers in 2014/15. It is not just about passing exams but surviving in business when regulatory and other costs are increasing each year and The FSA, Government and Mr Hoban are keen for consumers to buy products without advice and online with "simple products" etc. Also one should ask consumers if they will seek advice when they know they have to pay via in a different way. My guess is many won't pay no matter how the fee is deducted. Online sales will rocket.
Posted by: Michael Fallas
Statistrics and lies
Does the FSA research assume that all who have level 4 or above will stay in the industry? I suspect so. Whilst I currently intend to stay i the industry and am taking on new staff, the FSA change the goalposts daily and I may miss them or decide not even to shoot at the last minute.
Posted by: Phil Castle
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How many advisers will there be in 2013 ?
Is the answer 2 (TWO) ? One Independent and one restricted ? Does this qualify as " Gap Fill ?"
Posted by: Ian Lees