Blog: Quality counts in advice space

David Ferguson, CEO of Nucleus, reveals why the IFA community has many reasons to be cheerful.

I write this on the back of an inspiring couple of days spent with more than 100 of the UK’s leading IFAs at our recent Annual Strategy Event at The Belfry. Despite the well-documented pressures the adviser community continues to find itself under, these IFAs were upbeat about life and their future: probably more positive than I have ever seen them.

To understand the cause of this positivity I need to take you back a bit to 1999 or 2000. For it was then that an enlightened bunch of high-quality IFA pioneers started the process that has led us to what we know today as the RDR. They were enlightened because they realised that instead of selling products on behalf of providers they should be providing (or selling) advice to their clients.

They were not responding to any regulatory intervention. Like any pioneers, they didn’t get everything right. However, with the support of Transact, they delivered a much better client outcome, created unprecedented customer loyalty and created more valuable IFA ­businesses. As I mentioned before, their actions had nothing to do with the RDR.

They did what they did because it felt right. Meanwhile, the life and pensions sector and the bulk of the IFA sector were mediocre. (After all, when an industry acts with only cursory customer focus, and delivers ill-informed innovation, mediocrity is the only guaranteed outcome.)

A friend of mine, who held a prominent position in this sector, always argues this industry required a Truth & Reconciliation Commission. None of the incumbents would ever have supported such an initiative.

While the industry was ignoring the impact of technology, the IFA pioneers were getting on with changing the world. And their numbers were growing so quickly that by the time the RDR was trialled it was clear the regulator was playing catch up with the industry. I can’t recall many occasions when elements of this industry have led the regulator in driving positive change.

Key to this change was Transact. It just couldn’t have happened without Mike Howard, Ian Taylor and Malcolm Murray. Transact recognised that it, in itself, was not the product. Rather, it was a component that was required to deliver the end-product (ie, the advice). It knew that the product or service being paid for was not a pension, nor an ISA, nor an equity fund, nor a structured product, nor whatever product development departments were striving to complicate further in the early 2000s: it was high-quality financial advice.

Years later, it is still all about that quality, and those that realise this and are able to deliver it have every reason to be positive about the future.