Paul Resnik does not pander to his audience. On regulation, for example, he argues UK advisers have the level they deserve.
“It wasn’t the tooth fairy who arrived and said ‘I’m going to give you the RDR’ out of nowhere,” he says. “It was misselling, and billions of pounds of it.”
While such comments will inevitably rile sections of the advice community, Resnik speaks from a position of authority. His risk-profiling business, Finametrica, operates in 23 countries, giving him a unique perspective on financial services around the world.
“Every country is different and every country is the same,” he says. “There are three things you always hear: ‘my clients and our population are different’; ‘our markets are unique’; and ‘our regulator understands nothing’.”
But Resnik argues that risk tolerances do not vary from country to country. “The risk tolerance of Germans, Indians, Canadians, Americans, Australians, the English and everyone else are peas in a pod, despite the huge historical contextual differences,” he says.
“Risk tolerance is a personality trait. It does not seem to be hugely influenced by where you are from.
“Imagine what a German, South African or American has grown up with in the last 45 years. And yet the average risk score is about 52.”
Like many in financial services, Resnik, widely considered to be one of the leading authorities on risk in the UK, fell into the industry by accident.
The softly-spoken Englishman stumbled his way to Australia in 1969 as a “£10 Pom” without any real idea of what he wanted to do.
“I applied for a job and they looked at me and said ‘do you play full-back?’. I played full-back in both rugby and soccer, so I managed to get a job at an insurance company. That was how my career in financial services started.”
Fast-forward to 1983 and Resnik was tasked with setting up a financial planning business in Australia for Norwich Union – although he claims “two or three” others turned the job down and he was only picked because he happened to be writing training courses.
“My knowledge was about an hour ahead of 60 students every week,” he says.
After subsequently building an asset management business for the firm, Resnik created a life insurance division for Bankers Trust, an American lender, in 1989.
However, he left in 1991 because he “hated working for the Americans”.
“I’m not a particularly good corporate person,” he admits.
Resnik’s has been a career of two halves and in 1991 he embarked on the first of a series of entrepreneurial ventures.
“I set up a consultancy that was basically product design,” he says. “So for a period of time I was a product designer during what is now the equivalent of deannuitisation.
“Australia had a very small life tradition and all the reserves disappeared after the 1987 crash. So there wasn’t much in terms of annuities, and I made my living designing allocated pensions for major institutions in Australia.
“I then moved into multi-manager products and advised on those, and eventually became a shareholder in the company that wrote the code for Transact.”
From here, Resnik’s entrepreneurial zeal really kicked in.
“There is a line that says ‘you go where the fish are’,” he says. “I just kept on setting up businesses over a period of time. These were all designed to keep me amused and keep my children fed.”
Recently, he has turned his attention to so-called ‘robo-advice’ – the technology-driven solutions trumpeted by many as the answer to the advice gap.
But he warns the UK against following the example set across the Atlantic. “I look at the American model for robo-advice and I think ‘I wouldn’t ask this robo to run me a bath’. It is the quick and the dead. They are completely opaque. I look at them and think ‘this is jailbait’.”
Resnik divides the UK’s embryonic robo-advice market into two distinct groups: those run by small firms, such as advisers (‘entrepreneurial’), and those run by major institutions. He warns that smaller businesses will probably develop riskier technology-based business models.
“Entrepreneurial robos will be ‘cow-bos’ and institutional robos will be robust,” he says.
“It will be a channel that will make mistakes, just like humans. We have been involved in the development of several and our first impression is concern because the people doing them are entrepreneurial.”
Resnik expects large non-financial services companies to start competing with traditional businesses in the coming years.
He says: “Large businesses have lots of clients, and I can’t believe someone like Amazon won’t eventually be in this space, given its understanding of clients.”
Resnik also warns that the established order in the investment management sector faces serious challenges as passives continue their seemingly inexorable rise.
“Asset managers have got to continue selling hope,” he says. “For my business to flourish I need the active managers to flourish, but they are not doing a very good job.
“If everything moves to passive, all my clients will build their own risk tolerance software and I will be in trouble. I need the active managers to prove they can do things and show value.”
But what of the advice market? Would he ever be tempted to launch an advice business in the UK? And if so, what would it look like?
“With appropriate capital I would be very keen,” he says after a long pause. “It would be blessed, I hope, by a clarity and a transparency.
“I’m a believer in evidence and people being emotional decision makers.
“I haven’t thought about it concretely but it would be centred around emotion and respectful that almost every decision people make is emotional.”
While entering the advice market may be only a glimmer in his eye at present, Resnik’s vision for Finametrica is clear.
“My dream is to do something monolithic – to go into a large global organisation and make that business better.
“I won’t go down for having a nice little business that talks about being trustworthy. I want to embed this in a large organisation that is committed to transparency.”
You wouldn’t bet against him.
What’s the best advice you’ve received?
Never surprise your boss or team; keep everyone informed about the major issues impacting their roles.
What has had the most significant impact on financial advice in the past 12 months?
The rise of robo-advice.
What keeps you awake at night?
Working out how to effectively communicate that giving suitable advice is more than just meeting a regulatory minimum.
If I was in charge of the FCA for a day I would…
Name the two risk profilers (of 11) that passed muster in the FSA’s 2011 guidance.
Any advice for new advisers?
Your reputation starts unblemished; don’t ever let it be compromised.
Current: Market development role for Finametrica
2003: Co-founded financial planning soft-ware developer CARM
1996: Co-founded Resnik Communications
1994: Co-founded Finametrica
1992: Founding shareholder in platform software developer Object Mastery
1991: Founded Paul Resnik Consulting Group
1989: Established life company for Bankers Trust
1984: Set up financial planning/asset manage-ment businesses for Norwich Union
1976: Financial controller, Citibank
1974: Money market accountant, Development Finance Corporation
1970: Reinsurance calculator, City Mutual