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An empty manifesto

Whenever you hear a politician defending a proposal that has come under heavy fire, one of the most common responses is to point out that it is not only unpopular with the opposition but with the so-called extremists on his or her own side too.

The implication is that if all the sides within the political spectrum do not like the idea then it must be good because it reflects the “common sense” middle-of-the-road approach that resonates with the majority of the British public.

As it happens, I think this approach does a disservice to the so-called majority. There are times when a totally radical stance that ignores a bland middle-of-the-road methodology is by far the better option.

I have felt even more strongly about this in the past week or so, while gauging reaction to Aifa’s Manifesto for Advice. Many readers of Money Marketing will be familiar with its six “principles” but I will quickly run through them here.

They include a require-ment that professional finan-cial advice is focused on the client, with advisers being duty-bound to deliver the most suitable advice in the interest of their clients. Consumers should be able to obtain fair, expert advice to become well informed about what they need to do to improve their long-term finances.

Equally, advisers should be free to operate in whatever way best meets the needs of their business and clients, while regulation of their businesses ought to be “consistent, cost-justifiable and fair”. Meanwhile, providers should “support” the advice market.

Let me say at the outset that the presentation of this document was a major triumph for Aifa. There was overwhelmingly positive comment from all the trade press, as was to be expected, plus more or less neutral reporting from the nationals, including the Financial Times, which was a PR bonus.

Getting pensions minister Mike O’Brien to make vaguely positive noises about this “manifesto” was another great idea, even if all he said was that it “represents an important step in the debate” and that he looked forward to “seeing the progress IFAs make over the coming years as they put this manifesto into practice”.

The response of financial advisers to the document has been interesting. I have been wandering the internet to gauge IFA opinion. One of the most interesting discussions has been on the Citywire blog, which has attracted IFA luminaries such as Harry Katz, Martin Bamford, Phil Castle and Bob Donaldson.

Unsurprisingly, they are all in favour of the manifesto, describing it as a “commonsense approach to the debate”. Harry Katz says it is a “cause of satisfaction” that the document has attracted a “robust and speedy acceptance” from a Government minister which “speaks volumes for the influence and diplomatic skills” of Aifa.

Also unsurprising is the view of another respondent, Evan Owen of the IFA Defence Union, who wonders if this document brings to an end the “yellow streak” running down Aifa’s back, after years of “sucking up to the political pygmies”.

If I were Chris Cummings, I would be quietly thanking my lucky stars that people like Owen are around to attack the manifesto. Single-handedly, Owen has allowed Aifa to present its proposals as a moderate and sensible solution to the problems facing IFAs and the financial services industry as a whole.

It also means that advisers such as Gill Cardy, one of the most principled IFAs in the business, end up being drawn into supporting Aifa’s manifesto without criticism. So, for example, she tells Owen that “those people, not just IFAs, who consult this site will with some justifi-cation think that if you are representative then IFAs deserve to die. Which is why Chris Cummings is a better man and a more successful negotiator.” The irony is that, for all its lengthy gestation, and the claims made by Chris that this document “offers a bold vision for the future of our profession”, this manifesto is more about motherhood and apple pie than it is about asking (let alone answering) serious questions about the nature of advice in the UK and how it can seriously be improved.

Better-qualified IFAs? Who is going to say no to that? IFAs meeting the needs of clients and their business? Impossible to object to that. Consistent and fair regulation? Even the FSA will pay lip service to such a lofty view: after all, it all depends on who defines what is “fair”.

The acid test lies not in platitudes but in the way such views are applied in practice. Here, the manifesto falls flat. There is little in this document that even the shoddiest adviser might not pay lip service to – and then ignore in practice.

Which is why my prediction is that after the powers that be at the FSA have spent 10 minutes reading this document, they too will ignore it completely.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk

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