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Advisers would rather whine about change than implement it

I am trying to stay positive, I really am, but I am confronted by rampant energy vampires masquerading as disillusioned IFAs. Regrettably, I am also going to moan…about the moaners.

It seems that some advisers would rather whine about change rather than implementing it. The retail distribution review is clearly upon us and yet many are either bemoaning its imminent arrival or gambling upon its imminent demise.

Although I have been RDRcompliant for over a decade, I am no supporter of its implementation either. It is going to irrevocably damage our great profession and deny accessibility to quality advice for the public. Despite not liking it, we have to contend with it, yet I still meet advisers who are tortured by the need to modify their business model.

The sole topic of discussion during breaks at seminars is exams. Asking an IFA how he charged fees, hoping we may gain some tips from each other, he responded that he had never charged a fee or even offered the option to his clients.

In a speech about the transition to fee-charging, I explained that clients were willing to pay fees but only if they could perceive value, if they genuinely felt that their IFA was offering something unique in the relationship.

Later, instead of considering how to adapt the ideas for himself, a delegate was overheard moaning “that doesn’t happen in the real world”. I am concerned he is typical of many who have lost the enthusiasm.

If you believe that all is fine because we have still got two years left, think again. With only 26 months remaining, it is not a question of waking up in January 2013 and looking up the meaning of the word fee.

Change has to happen over the next six months in order to have 18 months of practice, failure and improvement while the cushion of commission still exists.

It is unfortunate that very few forums are addressing the need for fresh inspiration and motivation. Of course, we must absorb new rules, legislation and their effects. But what is the point in being the best qualified, most knowledgeable adviser around if you have no clients to exercise your skills with? Where are the training courses on sales ideas, marketing, prospecting, opening and closing clients?

Where can we gain inspir-ation to motivate our clients? It is certainly not from the RDR.

I can think of four Million Dollar Round Table events taking place in 2011 to lift the spirits and remind us of the value of what we do for our clients and the massive differ-ence we make to people’s lives.

Bhupinder Anand is managing director of Anand Associates


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There are 14 comments at the moment, we would love to hear your opinion too.

  1. As Nick Bamford has pointed out, Adviser Charging is not fee charging. Rather, it’s just a matter of agreeing with your client how much of what they invest into a product is going to be deducted to meet the cost of your services. In large measure, that’s little more than an extension of commission disclosure. Instead of the amount of commission (or AC) being tucked away at the foot of page 7 and therefore easily glossed over, the client will now be required to sign an extra page of the application form to confirm his assent to the sum involved. For all but those advisers/salespeople who hope to get away with an amount of commission which is excessive relative to the value of the services they’ve provided (and we all know which sector commonly operates on that basis), I don’t see why this should be a problem.

    With just a single exception, where the client wanted me to transact his business for so little remuneration that the whole exercise would have been a loss-making proposition, it certainly hasn’t been for me. (With this particular client, I refused to reduce my AC to the insultingly low level he was demanding and he went elsewhere. You either believe in the worth of what you do and charge accordingly, by whatever methodology, or you don’t ~ it’s as simple as that.)

  2. Plus, Julian, an adviser needs to be able to state and articulate his charging basis *upfront* – be it % of monies invested, % per annum, £per hour or £per job – and apply it with some consistency.

    You’re right that ‘Adviser charging’ is *not* the same as having to charge everyone ‘fees’ in the was BA’s article suggests.

    Its funny how FSA promote this as being the abolition of commission. Self-aggrandizement or what?

    Its not that bad when it comes to clients with lump sums or accumulated assets. What’s really being abolished is the ability of IFAs to work profitably with regular investors in the mass market…

  3. Why am I not surpised?


  4. The problem is ‘change’. Many people don’t like change and don’t want to change. It’s easier not to have to make changes even when there are a million reasons why ‘change’ is good. I suggest that everyone goes out and buys ‘Who moved my cheese’ by Dr Spencer Johnson. A brilliant little book that say’s it all.

  5. RDR is not change it is manipulation. Don’t be naive. Read what Adam Smith says:

    Adam Smith who took the view an economy runs automatically: But the process can be perverted by vested interests, who use government power to distort this free market system for their own benefit …The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

    Adam Smith Ibid.,Book1,chXI,p.267,para.10

  6. @Julian Stevens

    I absolutely agree with you that anyone who has confidence that the service they offer is worth the clearly articulated cost to the client has nothing to fear from the changes that are forthcoming.

    It seems many lack that confidence. There is sufficient time for people to make the necessary changes, even recognising the learninig cycles they have to go through.

    Moving beyond denial and taking the first step is most important.

  7. So we should just do as we are told even if we think that there are serious flaws with RDR and better consultation at the grass roots of the industry might provide a much improved solution?

  8. michael rogerson 29th October 2010 at 2:32 pm

    the problem isnt change Jon as anyone in our industry has lived through/moved with more change than any other i would suggest!?
    the problem is more is this change for change sake? is the change and result any better for the client? do my clients want to see me or an inexperienced/unprofessional/unpersonal but “qualified” advisor?
    if you wanted you and the FSA can speak to some of them and i think you’ll find any of us still left in our industry have clients that see the value and advice we have given them as essential and value for money what ever way we are paid or whatever “McDonalds type” diploma we may need.
    the arguement over RDR may not quite be over as how many of us are qualified or will be qualified in time to service the clients who depend on “non bank””non tied” independent financial advice? i suggest not enough and a lack of a diploma doesnt make a current experienced advisor bad overnight does it now!!
    i am totally bored of this debate now but watch this space….. i think we IFA’s might just get a midway point that suit all, but more importantly the CLIENT!!

  9. I agree with the content of the article and reluctantly with the title too. That is not however to say that we shoudl not be expressing our concerns about the RDIP whetehr we agree with the RDR or not. In my opinion (I am 45) an orderly and dignified timeline for the retirement of those who do not wish to upskill is in the consumers interests, while a rushed and botched implementation may appear to be in teh interests of some in the advisery community, but looks likely to me to actually end up being catastrophic if the numbers drop to quickly and are not replaced by new entranst who not only have the new qualifications, but the people skills essential for the job we do.
    I hope Bhupinder does not view me as whiner, but rather as a concerned individual who would like a debate about the RDIP rather than the RDR and as the FSA will not haev it, is why i have joined the call to ask (not I say ask and not TELL) my MP to consider the issues, make themselves aware of the conflicting opinions, debate them and then having drawn their OWN conclusions vote according to their conscience in any parliamntary debate which requires a vote.
    What more should I do in a democracy? and if I do not ask, then I accept rule by an Oligarchy, which is not the same.

  10. Just read Michael R’ss post and agree with what he is saying.
    I am already advsier charging and can finish (not I say finish) my diploma by end 2012. The question is do I want to if we are to be dictated to. At 45 I may choose to do the first year of a different degree course instead of my diploma. Give the industry teh midway point so that my older peers (not being agist) have time to leave gracefully and help the new comers develop skills to match their exams and I might just believe someoene is listening and it is worth staying if not I will probably be off as I’d ratehr do something totally different than keep having to retrain and upskill for things not relevant to what i actually do for clients.
    Oh yes, the two hour meeting I have just had with a family group (widow and 3 sons) was facilitating a discussion, no regulated advice, but you need to know about pensions, trusts, IHT, doemstic mortgages, Equity release etc. Currently I have teh qualification needed to advise on all of them, but do not have to have them for the meeting I facilitated. When RDR comes in, ironically I can still facilitate exactly the same meeting outwith the FSA’s remit should I wish as there was no advice. I’#d simply have to ensure I arranegd for the clients to obtain advice from a suitably qualified adviser after the meeting/familydiscussion was facilitated. Which is better, to encourage us to keep our knowledge current and remain in the industry advise on the areas we are competent in and pass on to a specialist in the areas we are not comptenet or continue to assist our previous clients while our knowledge fades and just leave them to find a specialist?
    The RDIP is a known problem for the short term, that is the dispute I need to whien about.

  11. I do not have a problem with passing exams. Like the other two posters, I am mid forties and am well on the way to Diploma level. However, I can see the potential problems with older advisers (and there are plenty of them). Most of these guys are skilled and honest. They do a great job for their clients, but cannot see a future for themselves in a world that cuts off their livlihood if they can’t pass the exams. For most that are educated to FPC level, the Diploma will take an awful lot of time and expense to complete and I can see why they are planning their exits from Financial Services.

    I can also see the benefit of adviser charging in respect of lump sum investments, but am concerned about clients not seeking advice because they are scared of adviser charging – For instance clients looking to purchase an annuity or save regularly for university costs. I think this is where the less well off clients will lose out.

  12. Well Mr.Anand if fighting for my clients rights to choose how they wish to pay for my services makes me a rampant energy vampire (whatever that is) then so be it

    If Mr.Anand you think that despite my 26 years experience, which apparently count for nothing, learning about EU directives etc makes me better qualified to give advice then you are clearly out of touch

    And no Mr.Anand I am not tortured by change I have been there many times in my career but I do believe in fairness.

    Your comments about having to contend with it, despite your belief that it will damage our profession leaves me speechless.

    Some of us Mr.Anand stand up for what is right and what is wrong.

  13. I thought advisers have been adjusting to change for the last 13 years?
    At times change is NOT for the better? and at present the FSA regulations are slowing down the economy and hindering the business?
    So if we do not protest or whinge, who will? U fire a driver on the underground and the system stops causing misery to millions? The FSA has decimated the adviser population and our professional bodies are censored by MP’s for NOT making a noise or protest!!!

  14. Juian,
    I read this morning that the incoming NEST strategy has been largely copied from the Australian model.
    The inital amounts payable by Employers into the the UK NEST is well documented and I believe the Australian Model started out at siilar levels.
    However, I believe that Australian Employers are now obliged to pay a whopping 11% into their Employee scheme after a series of increases and it is now largely regarded as a stealth tax in OZ.

    The reason for relating this is that RDR will undoubtedly be the thin end of the wedge as well.
    I agree that CAR is not a fee but an agreement with the client as to the method and the amount the Advisor will receive for the advice.

    All very well, but once RDR is established, I believe the Regulator will introduce a product charging structure per transaction, ie maximum of £x for arranging an ISA, pension, Bond etc which they will gradually erode over time as they see fit.

    So assuming we all manage to survive and thive post RDR, contrary to the Regulators wishes, the slow strangulation will likely follow in time as they grind our fees into the floor.

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