At last

I couldn't have put it better myself. We also deal with the normal man in the street and the RDR will stop him taking advice. The RDR is fine for HNW but a stab in the back for the normal working man. The FSA has failed and it shows by the number of fines it is leveying. The banks destroy the financial system and the FSA kicks the financial advisor community. Why? They are run by ex-bankers. The previous leaders of the FSA are partly responsible for the current crisis.

Posted by: Chris Glen

what can older IFAs do now?

Interesting article and much of it is what I have been saying since the FSA invented the RDR as their idea of regulating this industry! I have been an IFA for 2 years less than Mr Gair and I agree with hime that the RDR will cause more problems for clients that it solves. I have no intention of taking exams to say I belong to a 'profession', but I have always carried out my job perofessionally. Will there be a job IFAs like me can do when we are forced out of our livelihoods by the FSA at the end of 2012?

Posted by: Derek Vivian

Change

There is no doubt that "simplicity, tradition and client loyalty" are important bedrocks for a successful IFA business. But so is the ability to adapt to change. I heard it expressed really well this week at an IFP meeting where the speaker quoted (I believe Jack Welch of GE) who said somthing like- "When the external rate of change exceeds the internal rate of change in a business the end is in sight" Denying the advance of the internet and misquoting the RDR stance on adviser charging (it is not about fee charging it never has been!)and failing to see the interaction between relevant experience and relevant qualifications strike me as ignoring the external change and that represents great risk indeed. Simplicity, loyalty and tradition alone are about to get steam rollered by the external rate of change

Posted by: Nick Bamford

Foolish the IFAs that don't agree

Derek We know each other and you know that I would agree with your views as mine is the same. Any IFA who thinks differently and agrees with anything the FSA represents or has done, is fooling himself. We IFAs are not that clever, we are not wealth or fund managers but distributors of what were fantastic products to the public before we had interference. So for those few on their moral high horse, get off it pleasea syou are spoiling what we really represent. The IFA logo was introduced by IFAs and now stolen by the FSA. They have no right to this as they have no understanding of what 95% if IFAs do!

Posted by: paolo standerwick

To Nick Bamford

Forgot to mention to Nick Bamford. Warren Buffet doesn't even own a computer, say no more. So your argument falls apart totally about technology. It takes all sorts to do business with clients who have all sorts of ways they wish to but from us. You do it your way and I'll do it mine. If technology is a must it's because we've been pushed into it by the big boys and regulations. In fact technolgy may have been the instigator and facilitator of the banking collapse! There is always a downside to everything!

Posted by: paolo standerwick

How interesting - Just LIVE and LET LIVE

Those that broadly agree with my sentiments in this article should join up with the Adviser Alliance. However, I read the comments to my article from Nick Bamford. For the record Nick, I have absolutely no problem with you charging fees or whatever you like I just dont like people telling me that their way is best - its not. But hey if you're happy hey ho get on with it. The subject of technology - in my case it is simply my clients deal with me face to face thats it i am not interested in new faceless inernet clients. That is not to say that I do not encompass technology to help my business efficiency and therefore my clients own financial well being as I said I absolutely do in every respect. Fee charging will not work on regular premium business and therefore the savings/pensions/protection gaps so widely talked about (by people who have absolutely no idea what the hell they are talking about) will not get closed it is not the bloke with a £100,000 lump sum that will start to close the gap (or come to that the bloke with £10,000)its the bloke we encourage to put in a regular premium. If you then say well we dont deal with them we only deal with HNW - then best of luck to you (I however think that will be short-lived) I do and more importantly I want to like most IFAs I know. I have a rule of thumb when I judge people that has served me well "would I go down the pub for a pint with them " ? Now, for the record, AND I ADMIT IT - I went to school with ANDREW FISHER (same year same form same classes - left school the same day !!!)and guess what funnily enough I would go down the pub with him even though he talks with fork tongue as far as I am concerned. There are however a lot of Wealth Managers I have come across down the pub on their own.

Posted by: Derek Gair

Who is the Canute?

The major problem with the RDR is that it represents an amalgam of differing ideas which have been shoe-horned into a policy statement. In trying to alter the flow of events the FSA has bitten off far more than even its greedy and lunging maw can cope with. Adviser charging is but one aspect. I completely disagree with Nick in that change is perpetual and like most things some changes are warranted whereas others are pointless. Change for its own sake is dubious at best and foot-shooting at worst. Will adviser charging enfranchise consumers? Answer, some it will and some it won’t. When you consider that consumers like a choice and that the majority prefer the apparent fee-free virtues of the commission route we have the problem. Not only is the FSA forcing unwarranted change on the bulk of IFAs but it is also foisting a reduction in freedom on millions of consumers. If we believe that financial services is subject to the law of the jungle then, if the FSA and Nick are correct and fee-based advice becomes the premier route, those IFAs who retain a commission-only model will founder and disappear. We won’t need Canary Wharf edicts to achieve this. On the other hand, if the FSA and Nick are wrong, and consumers wish to have a choice of commission, commission offset or fees then irreparable damage will have been inflicted, yet again. Of course, FSA employees, civil servants and other quango inhabitants will sit back safe in the knowledge that their actions carry no personal financial penalty and, in many cases, the originators of these failed policies will be sitting snug behind some large beef Wellington as they discuss the finer points of their new non-exec directorship in the private sector.

Posted by: Alan Lakey

How nice to see...

... another IFA who is proud to serve the mass-market of ordinary people. One day the FSA might realise that it's probably more accurate to judge an individual's or firm's ethics by how much imporance they attach to treating the little guy right. Sure, everyone looks after the big rich clients - who wouldn't? But it's how you treat the little people that shows whether you've got the heart for it or not.

Posted by: Neil F Liversidge

Busier than ever

We've got potential new clients coming out of our ears at the moment who want advice and are willing to pay for it, either by commission or fees (I don't care which, so long as I am paid). The problem is, there are not enough ours in the day or thinking time (the time to put yourself in your clients shoes and mindset after doing your fact find). The RDR risks disenfranchising my potential clients by forcing me to take time out to study for exams which measure areas I do not even advise on. Extenral forces of higher minimum exams that remove advisers when the demand for something (your GP IFA)in between Certified Adviser and a bank/insurance salesman unless all the CFPS want to take on the middle earners we deal with is immoral. The worst thing is I don't even think the banks will pick up the advice gap parts of the RDR will cause either...

Posted by: Phil Castle

The voice of reason

Great piece, IFA like this are the bedrock of the financial service advice system. IFAs are not stockbrokers despite Sants view that qualifications would put them in that space. Simplicity, tradition is value that clients expect yet is often lost in the rush to fix what is not broken.

Posted by: The Bellweather

And who helps them sort out the financial muddles?

I agree with the overall thrust of Derek's comments and would like to add that the FSA has overlooked the huge problem that 95% of people have, which is sorting out the muddle their finances are in. They have no idea where to start usually, do not understand the intricacies of the plans and the rules surrounding them and haven't a clue where the original provider company is now or what they are called. They also cannot afford huge fees to sort it out. That is where the IFA that deals with the everyday person keeps the industry going, in sorting them out and helping them get straight. The banks can't and have no interest in doing so, let alone the ability to see to the root of the problems. If the FSA keep their attitude that all IFA's are in the wrong and need legislating out of business, God help the public who will have noone to help sort out the insurers and bank muddles.

Posted by: Lyn Cooke

RDR IS NOT CHANGE ITS REGRESSION

I think Nick Bamford is in danger of seeing RDR as change. It is not, it is regression to a past era when the financial world was dominated by tied sales forces to the detriment of the consumer. Change is not always progress, new is not always good, and financial distribution cannot be created by such an idiotic approach as RDR proposes to take. Our industry has evolved and the changes that have taken place have been normally small, but the accumulation of these differences over time has been responsible for the best method of distribution possible for intangible products. The laws of evolution also warns us that sudden change, without time to adapt can result in the catastrophic failure of a species – in our case the independent adviser. RDR is unnecessary, too much and too soon.

Posted by: SIMON MANSELL

RDR who does it help!

I have been trading since 1990 and totally agree with the comments. I deal with a full cross section of the general public and the payment of fees (at a level at any meaningful level) is not acceptable to the majority of my clients,RDR does not help my clients or the public in general.

Posted by: John Rowe

RDR and all that jazz

The remarks of Derek Gair echo the thoughts of hundreds , if not thousands of IFA practitioners. The FSA has failed the public, or should I more correctly state, the employed managers of the FSA have failed the public. If my practice could not only forsee but forwarn our clients regarding the ineviable outcome of the banks' lending policy. FSA STAFF should pay, not us.

Posted by: Terence P O'Halloran

RDR etc

Excellent piece, well presented and argued. A short poll among my clients with the question "would you sooner pay fees or continue the way have always conducted business?" brought a 100% response. Lets continue the we are. Qualification or competence? Both would be great but if I had to settle for one or the other, give me competence every time. Be it lawyer, accountant, auditor, actuary, policemen, fund manager, driving instructor, pilot, or the surgeon operating on my grandchild. It seems to me that it is simply not possible to trust FSA because in every single significant area where they have been required to act/guide/protect they have fallen down; their judgement is fundamentally flawed and that is because their understanding of FS is fundamentally flawed and that is because their own "experiences" differ wildly from the populous at large. They are reinventing the wheel and it looks like a hexagon.

Posted by: allan young

From the outside..looking in

I see some opinions, that is all they are. I can see both sides, none of them are 100% right 100% of the time. What you lot should consider is that the FSA thinks the RDR will produce more stockbrokers, have you ever met any who could be bothered to twist someone's arm to buy some life cover or some income protection (NOT PPI) when they can get fat flogging equities? The FSA also believes that allowing banks to flog products and earn a fat commission will end up with people having something which is ‘better than nothing’ despite the fact that more often that not nothing is better than ‘something’ that is a waste of money. The FSA believes that the RDR will create some 'professionalism', my experience of the wide diversity of adviser ability and scruples shows that it doesn't count for much in the scheme of things. I wish I could bring balance to this crazy market but you are all (regulators included) guilty of being part of the closed minds society: As the saying goes: "None so deaf as those who will not hear: Meaning: Nobody is more deaf than the person who decides he does not want to listen. Often used in reference to prejudice and intolerance.

Posted by: Balance Aforethought

Yeah

Well said, Evan.

Posted by: Captain Sensible

RDR Thoughts

After 33 years in Financial Services, I like Derek am fed up with change for it's own sake. Will RDR really deliver a move from Sales based IFA's to truly impartial advice uninfluenced by payment type....I doubt it. Will it improve access to Financial Advice or encourage the General Public to get their finances in order....Certainly not. Will it cost small firms a fortune and reduce employment and investment in the sector....Yes. Like most Government initiated change it has major flaws and suffers from the law of unintended consequence. Most obvious is that the honest hardworking very experienced advisers who have never received complaints or sold products solely for what they earn out of them may be driven out of the business. Whereas younger inexperienced "Salesmen/women" who can pass exams will replace them. Is this good for clients or the industry? Having just finished my Diploma exams I can honestly say that I have learned nothing that would make me a better adviser or provide a better service to my clients. I have great sympathy with those who are struggling to come to terms with this whole area and like Derek think that the vast majority of IFAs give sound advice and excellent value for money. We are all aware though that there are those in our industry that damage it's professional reputation and provide poor value with no ongoing service or reviews and huge up front commissions being taken which cannot be justified by the work involved. If RDR solved this it might just be a good thing but I don't believe it will and "throws the baby out with the bath water" The industry should have it's own code of practice and ethics standards, expelling wrongdoers ourselves and then we would not have this Bureaucratic nonsense imposed from on high.

Posted by: Ian Couling