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AIFA’s view – Fay Goddard

As 2004 draws to a close, it’s out with the old and in with the new. We now have the final rules for depolarisation, stakeholder pensions and basic advice, not to mention a whole new set for the mortgage and general insurance sector.

The real graft is just about to start, incorporating all those rules and regulations into the nittygritty of day-to-day business. For example, January brings a further raft of regulation covering general insurance. Virtually all IFAs will be affected as general insurance includes protection business.

Here is a “to do” list for 2005. First item – January 14, the date by which your business needs to comply with Icob. Aifa members can draw breath as help with pointing out the key rules and what they mean to IFAs is on its way.

Next stop – April. That is when the stakeholder pension products and the basic advice regime come into play. Some might suggest that the idea of unqualified people providing financial advice on pensions and unit-linked savings through scripted questions is an April Fool joke but the joke would be on the adviser if he or she were later accused by a client of misselling. In any case, it is unlikely the IFA world will be champing at the bit to take up the reins. IFAs are not in the high-volume “stack ’em high, sell ’em cheap” business.At the risk of sounding pretentious, IFAs take a more holistic approach to financial advice. They may well advise on cash Isas and child trust funds but that will be as part of a wider financial plan. It is in that context, and possibly setting up stakeholder pensions in the workplace, where they may get involved. But we will be watching with interest to see who does jump into this market.

June 1 is the red letter day for IFAs. By then, you will have to have decided on your business model – to continue as an independent adviser, a whole-of-market adviser, become multi-tied or a mixture of any but, whatever the decision,you also need to have produced your menu and have in place all the requirements of the depolarisation regime.

Choosing a business model is not a cut-and-dried choice of which appears the most profitable – or even the more efficient. You also have to consider how your clients will feel.If you sold your services to them on the basis of your independence, how do you win them over to any new proposition? And there is another trade-off to consider. Referrals from professional connections will continue to be made only to independent firms. And, finally, make sure the fee structure of your business model is as cost effective and practical as possible. There are numerous training events on running fee-based practices which offer some valuable tips.

Well, that’s the first six months under our belt already and we have not even seen the old year out. Let us end with looking at the positive outcomes. IFAs have tremendous opportunities. The demand for quality financial advice has never been greater. Advice on pensions pre-A-Day – even more post-A-day, IHT planning, wealth management for the property-rich, cash-poor are all natural IFA territory. Make sure your menu emphasises your area of expertise – make sure it is a carte, not table d’h㣡 In the meantime, may I wish you all a very prosperous new year.

Fay Goddard is acting director general of Aifa


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