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Get a sense of reality
It’s not often I invite IFAs to skewer me in public but any readers of this column that will be attending Aifa’s annual dinner in London next week might see me wandering around.
I will be a guest of BPP Learning Media, which recently launched a case study retail distribution review qualification with Aifa. So feel free to come and say hello, or worse. It will be interesting to hear people’s views, as well as those of the Aifa, with regard to the RDR. One of those who I suspect won’t be making any speeches yet, sadly, is Stephen Gay, incoming director general at Aifa.
This week it was reported that Gay will officially be taking up his new post on December 1. He told Money Marketing: “Members need the assertive representation they receive from Aifa, AMI and AFB. I am keen to build on this and ensure the interests of members are recognised where it counts.”
The word assertive fills me with gloom. In recent weeks, Aifa has been coming out with increasingly bizarre comments, including the suggestion that IFAs are like shopkeepers and product providers should be paying them to distribute their products.
In the past few days, I have received a number of emails, including several from senior Aifa members, that disagree with this analysis. One of them told me last week: “My clients get the products for free - what they pay for is the advice. Whether they buy anything thereafter is irrelevant, they still pay.”
Another said: “I am bemused by Aifa’s stance as I have never thought any professional IFA/financial planner had a stock of products to sell. We only sell our expertise, like other professionals. If we need a new product, we get it from a manufacturer (generally via the internet) at cost price and pass it on at that price.
“If IFAs think of themselves as shop-keepers they should be quite pleased that Mark Hoban recognises they are as well qualified as a McDonald’s supervisor - they are indeed among their peers. Nothing wrong with that but it is not a professional service.”
Some advisers have suggested that Aifa’s latest pronouncement has been urged on it by its close ties with IFA networks, whose current business model will clearly be affected by the RDR.
It is an interesting theory. My own worry is that it is also indicative of intellectual drift at Aifa and an attempt to revisit the battleground of the early 1990s rather than deal with post-2012 realities.
What is really needed is an incoming trade association boss to spell out a few harsh truths to his members - and some of his staff. As PFS chief executive Fay Goddard pointed out last week, hoping that any of the RDR proposals will be watered down ahead of 2012 is likely to end in bitter disappointment for many. Far better to prepare for the future and make the support you will provide to those who begin to engage in the process your core message to members.
Ironically, Aifa is actually taking steps to do that. The new Diploma in Investment Planning, available through BPP Learning Media, allows advisers to gain a qualification that exceeds the minimum level four requirements stipulated within the RDR, without the need to undertake gap-filling CPD. These case study-based assessments still involve a series of examinations but reflect much more fully the daily work of an adviser.
To outside observers, a strong emphasis on this side of Aifa’s work would not only be highly practical but would also demonstrate the trade body’s new commitment to professionalism.
Instead, what we see are forlorn attempts by Aifa to stop the RDR clock. Only last week, another article in Money Marketing saw Aifa’s policy director Andrew Strange facing both ways. After spelling out precisely some of the points I have been making here, he still felt the need to call for “an appropriate, pragmatic transitional period, without cliff-edge dates, for competence to be evidenced through vocational routes rather than examinations”.
Not only is that not going to happen but, more worryingly, what this and Stephen Gay’s comments seem to suggest is there will be a balancing act between the militant tendency and more realist wings of the IFA community, with a public lean towards the former.
Like its 1980s counterpart, the IFA militant tendency’s views are forged on mistrust and suspicion. Its members regard any pronouncement by the FSA and other official bodies as an attack on their very right to exist.
By contrast, the realist tendency has a more sensible long-term appreciation of where Aifa and its own profession should be headed in the coming years. For their views to be ignored or downplayed in the hope of keeping the militants onboard is a tactical mistake. I would much rather lose the loonies than the realists.
Nic Cicutti can be contacted on nic@inspiredmoney.co.uk
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Readers' comments (59)
Evan Owen | 11 Nov 2010 11:00 am
Will he bring balance to AIFA?
Will he remove the dead wood?
Hope so.
As for Nic, can't see much balance here in his weekly wotsit, such a pity.
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Anonymous | 11 Nov 2010 12:44 pm
Nic has always been off balance Evan.
You can get treatment for that nic.
Not sure why he is worried about AIFA's stance, they do not appear to have one, except to agree with whoever it is they are dealing with at the time.
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Simon Kershaw | 11 Nov 2010 1:10 pm
Nice advertorial Nic. How much are BPP paying these days?
As one of the many IFAs who disagrees with some aspects of the RDR I object to being referred to as a "loony" - particularly from someone like you.
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Anonymous | 11 Nov 2010 2:35 pm
Yes to greater professionalism. No to rip off products. Will the RDR achieve either of these aims? Extemely unlikely,
The financial advice market was evolving, professionalism was increasing. If the FSA had supported evolution we would be a lot further forward than we are now. Enough resources dedicated to TCF would have result in a huge changes in the industry, provided it is applied fairly accross the spectrum including banks and providers. With a properly targeted and developing TCF regime there would be no need for RDR.
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Anonymous | 11 Nov 2010 9:14 pm
Just had a look on AIFA's website to try and get to the bottom of what their stance is on the RDR. Went to 'Current Issues' 'RDR' and the latest update was dated 7th May 2009. Way to go AIFA (not).
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Ron | 12 Nov 2010 8:30 am
What a silly comment Nic, stop and think before puitting your fingers to the keyboard.
A client gets a product from any adviser and there is no distribution cost involved at all?
PI Insurance is only for advice not for misselling anything?
The compensation scheme only makes payments for incorrect advice never for product failure?
Just taking PI Insurance and the compensation scheme cost these are adviser expenses which are passed on to the client, I think your RDR chums like to have transparency end at the point of their choosing.
Think again.
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Nic Cicutti | 12 Nov 2010 10:12 am
@Simon Kershaw. Someone recently asked me what it is that gets me riled about my ongoing "banter" with IFAs. I was happy to tell him that I can take almost anything on the chin, even personal insults. If you dish it out, you have to be prepared to take it and my overall response to the many hundreds of comments about my column, some of them quite abusive, bears out that I generally do so with good grace, albeit I am always likely to remain argumentative.
In fact, I wasn't trelling the entire truth. If there is one thing that does make me stratospherically angry - so angry that if you were in front of me as I write this I might find myself "doing a Joey Barton" on you - it is any suggestion, even the remotest hint of a suggestion, that I would ever write about a company for financial reward. By all means engage with me in terms of an argument, but never suggest that I take bribes. That, at the end of a day, is what an undeclared advertorial is about.
FYI, I am not being paid a penny for my comments - other than an invite to a typical mass-produced meal, usually involving some variant of luke-warm beef and potatoes, served haphazardly to several hundred people by a small fleet of underpaid foreign skivvies, with all its likely inherent "quality" issues.
It will involve me travelling up to London entirely AT MY EXPENSE and staying in a hotel entirely AT MY EXPENSE, all so that I can hear what IFAs have to say about the RDR and their industry and then listen to someone drone on at the end of the meal, as they usually do (hopefully not in this case). Doing so will cost me several hundred quid of my time and money, so for you to imply my comments are about bribery is not just offensive but ignorant.
Moreover, in the grand scheme of things, I can honestly say that my "paid-for" meal next week - which will cost me many times its true value - counts for nothing, zilch, nada, niente, zip alongside the wide range of commission-based kickbacks, foreign holidays, free meals, golf trips and other financial bribes enjoyed by the vast majority of IFAs I have encountered over the past 20 years, including - quite possibly - yourself.
Before you even dare for one nano-second accuse me of accepting bribes take a long hard look at yourself and your chums in this industry. Then, if you have the remotest shred of decency whatsoever, which I doubt, apologise.
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Julian Stevens | 12 Nov 2010 10:48 am
What has AIFA cost over the past five years and what has it actually achieved? It never tells us. Does anyone know?
I've recently started receiving e-mail bulletins from AIFA but all my efforts to log in to their website with the details given to me by AIFA are in vain. I reply to these bulletins pointing this out but never receive a response.
But still the consultations, the lobbying, the meetings, the (vain) efforts to "engage constructively with the FSA" continue. For what? What 's it all achieving? Not a lot as far as I can see. It's just a bunch of men in suits waving a flag.
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Anonymous | 12 Nov 2010 11:06 am
Good Grace? you are having a laugh nic.
You can dish it out but the truth is you cannot take it, otherwise you would not find the need to constantly have a jibe, like the one you just had above.
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Simon Kershaw | 12 Nov 2010 11:09 am
Nic,
For 20 years or so I have read your comments on my profession. For most of them it has simply been a reason to throw a pink journal ineffectually against the nearest wall/person/. In recent time I have been able to vent such spleen by posting on the interweb version of said pink.
You get off on provoking IFAs like me. If my tongue in cheek poke at you got you rattled then I am delighted. I do not care which troughs you feed in - if any. You may be the most virtuous journalist who has ever lived but, when you pour weekly vitriol on my profession, and, by association, me, you lay yourself open to counter attack.
For the record I do not think you to be venal, bribe taking or corrupt. I do know that you effect censorship, which I would have thought anathema to a journalist.
I will be in London on the 17th. If you fancy a scrap - or a pint - let me know.
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