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Alliance reliance

Most readers will be aware of recent plans to turn the IFA Defence Union into a more robust organisation. One with a solid infrastructure, full accountability and an increased membership.

For reasons already well documented, this transition failed to materialise which was a major disappointment to myself and many supporting advisers.

Following this setback, I was urged by a number of senior industry figures to start up a focused, adviser-serving body that would fight against misregulation and the pernicious and seemingly inexorable removal of advisers’ legal rights.

Quite a task but Derek Gair, Steve Farrall and myself concluded that while the idea carried merit, unless a certain critical mass could be attained, it might prove unviable.

Two weeks back, we under-took an exploratory email shot to advisers asking whether there was an appetite for such an organisation. We were hopeful of a “yes” response of around 50 per cent. In the event, a surprising 92 per cent of respondents felt that IFAs were not being fully repre-sented and undertook to support a dedicated adviser body. While we knew that there was a big number of advisers who felt disconnected and powerless the level of response was totally unexpected.

This provided a clear mandate for taking the idea forward and I am pleased to announce the formation of Adviser Alliance which is mandated to lobby and inform regulators, MPs and other relevant individuals or organisations of IFA views, with an aim of bringing about regulatory change and a more balanced advisory world.

We will shortly be launch- ing a website and will be contacting as many firms as possible to provide greater information and invite membership. Interested readers can contact me initially at alan.lakey@

Last week, at an Ilag meeting, I had the pleasure of engaging in debate with the redoubtable Andrew Fisher from Towry Law. Many of you will know him to be a vociferous advocate of a fee-only approach, even though Towry Law’s charging structure is based on a percentage of funds under management, a calculation not dissimilar to initial and trail commission.

The surprise for me was his somewhat grudging accept-ance that there is a place for commission on protection policies. It seems his anti-commission views primarily extend to the “bad-adviser” element that take 7 per cent from lump-sum investments and sell discredited with-profits bonds.

This is a major turnaround on his behalf because it was just 12 months back that he wrote to Gordon Brown explaining that the global economic meltdown was entirely due to commission.

I have always believed that true fee-based business relates either to an agreed hourly rate or to an agreed fee, irrespective of whether funds are invested. If I am correct, then Towry Law actually operates a commission- based model rather than a fee-based model.
Charging a set-up fee which exactly mirrors funds under management is the same as taking initial commission. Charging an annual fee which exactly mirrors the funds value is identical to taking trail commission.

One of the reasons that Towry Law seems to be doing so well is that whereas commission-based advisers typically get between 0.25 per cent and 0.5 per cent a year, Towry takes 2 per cent a year on the first £100k.

So Andy has a very good business model which is profitable and, apparently, expanding. What a shame then that he does not say that he operates a sophisticated commission-based company.

Alan Lakey is a partner at Highclere Financial Services


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Alan didn’t mention that you can sign up to be kept informed at


  2. Alan, all that matters at the end of this infernal regulatory day is the client. A happy client doen’t complain, the FOS figures appear to prove that IFAs are the most trusted and reliable source of advice however they are remunerated. Clients need choice, the RDR appears to be designed to reduce that choice. Andrew Fisher has all the time in the world, and lots of company money including AIFA subscription savings, to do his lobbying for his company’s benefit but he isn’t the enemy despite his successful, and possibly counter-productive, efforts to attract the attention of the vast majority who do not share his views. The enemy is in fact the top down approach to regulation which begins in the policy unit at HM Treasury so whatever Mark Hoban says about the RDR being the sole responsibility of the regulator it is a fact that politicians always start the ball rolling when they need someone to blame and to be seen to be doing something about the latest calamity caused by “collective intellectual failure”.

    I wish you well with your Adviser Alliance and my offers still stand, I just hope IFAs don’t let you down.

  3. Happy Clients do complain 20th October 2009 at 12:27 pm

    Actually Evan happy clients do complain and you have done more that any to expose this! The regulator has corrupted the consumer. Regulators, are also institutionally corrupt, supplied the consumers with millions of shortfall warnings based on lies! They projected “surrender” values (not the correct fund values) of endowments, which of course created shortfalls. Further many of these endowments were originally based on false regulatory illustrations (LAUTRO) projections. The FSA wants to cull the IFA because IFA’s have stood up to them and reject corruption! Any IFA in practice today will be able to tell you stories of how, with the prospect of a freebie compensation claims and a total lack of personal responsibility the UK consumer has been seduced into false compensation claims.

    I am certain the regulators are not only corrupt but also vindictive so I will not disclose my name. There are as we speak 2,223 signatures on a NO FSA CONFIDENCE petition. This is the third most popular in the Economics and Finance category. The FSA do not have a popular mandate and it is time they were gone!

  4. Dear Anonymouse

    Yes I did expose a lot of things with some help from my friends, don’t know if they still are.

    Be careful what you wish for. Will a state funded BofE be a more amenable regulator than the HMT controlled FSA?

    Will anyone listen to you in an understanding way if you rant? Or will the regulators think you have ‘serious issues’ and send three men to your offices to have their conversations recorded?

    Yes ‘consumers’ have been encouraged to blame others if anything goes wrong, as do politicians, and some advisers as it happens.

    Yes you should be afraid of putting your head above the parapet, we have evidence that some, not all, regulators are, or were, unwholesome and vindictive.

    Yes the LAUTRO assumed expenses fisaco was a cock-up, it was designed by the government, as were the pension transfer redress calculations and many of the current policies which will fester for a few years before the unintended consequences are uncovered. I would ask you where your trade bodies were through all this, or your lawyers for that matter. How many signed the ‘New’ PIA contract’? Most of you out there did without any though of the consequences, the sensible ones sought legal opinion and promptly left the industry, so they tell me.

    I had hoped to sort all this out but ran out of steam and hit the financial buffers, so sad but we now need to move on.

    Yes regulation is getting tougher but you haven’t seen anything yet.

    As far as mandates are concerned is it likely that any regulator will ever be popular?

  5. CAR to which the client would have to put his signature would solve almost all commission bias problems at a stroke, particularly if accompanied by a clear note explaining that commission is always paid ultimately by the customer and not from some nebulous benevolent fund.

    If the foundation of Andrew Fisher’s rants against commission is bank salespeople flogging bonds to all and sundry for commission of 7%, then why didn’t he just come out and say so? We all agree not only that such practices are bad but that the FSA’s continued turning of its blind eye to them is almost equally reprehensible. It’s called regulatory bias and is one of the most bitter pills we have to swallow day in, day out.

    I look forward to the development of the Adviser Alliance. It couldn’t have a better captain at the helm than Alan.

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