Roles of Aifa and the IMA need to change
When people are dying, they often have a period of sudden lucidity just before they pass away, it allows things to be said and people to converse in a way that keeps memories special.
That is true of people but is it also true of organisations? Here I would state categorically it is not true of organisations as I would cite the sickly Aifa and the terminally ill IMA.
Taking the latter first, if you had any doubt about the IMA, its latest comic (I cannot bring myself to refer to it as a research paper) is written by two of the IMA statistics team, yet, despite their supposed background, they sought no data from the structured product providers relying evidently on Lipper. In short, the paper seeks to rubbish structured products (and Peter Hargreaves thought this was his job!)
It is not even more ironic that here we have the man who was anti-passive seeking to use tracker funds as a club with which he seeks to beat the structured products.
It is clear that Mr Saunders and his team are not happy in the world of statistics. You only have to look at the debacle they call sectors to see that. The IMA sought to drive the Nest agenda on investment and, given the result, I wonder if they understand the actual investors. If they did we would not be where we are.
The last paper from the FSA on suitability in investment has contributed more to the debate than any recent papers from IMA, the role of the IMA needs to change I am not sure its personnel are the right team take it through that change.
Dick Saunders recently challenged the FT on a comment that they made on rebates which he refuted by suggesting that rebates were at a much lower level but was unable to provide any more that a broad approximation.
Challenging statistics requires accuracy, not approximation, yet that same mistake was made in the recent paper of structured products, so this is not an individual error. These errors of statistics are institutionalised.
Stephen Gay has taken on an impossible task. Aifa has a public position but lobby in a different direction in private. It would be better for Aifa to become a body to lobby on the value of advice, as that and not independent v restricted is the issue today.
If we are to build a strong profession, the public need to know what we do and why it is worth paying for now and on an ongoing basis.
Let’s get the message across in a way that covers all the generations and not just Middle Britain. Just as we need to segment our client base, we need to vary the way we communicate to different segments. The DWP has taken this approach on state pensions and the public has paid attention that simply did not happen when the phased increase to 65 was introduced for females. This time, with better communication, it has not only been spotted by the public it has become an item of debate.
For both Aifa and IMA,their fate is sealed by the fact that those who are ruled by committee either die off as they take the majority view or take an ill judged consensus approach. If the investment providers want to be taken seriously, they need a fresh approach to representing themselves. They need a strategic approach, they do not need an organisation moribund with committees producing intellectually defective material.
Robert Reid is managing director of Syndaxi Chartered Financial Planners