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Anchors aweigh

This year’s PIMS conference was a strange mixture of optimism and pessimism. Overall, IFAs are happy with what is happening in regulation. There may even be signs that the top-enders – chartered and certified planners – are coming round to the idea of RDR Mark II. They did, of course, approve of RDR mark one but one planner on board the Arcadia last week said they had decided, on reflection, that the first version was too harsh and would have driven too many advisers – and not necessarily the bad apples – from the industry.

Another planner on the new model side said he was sad to see many of the proposals dropped but, having spoken to Aifa’s Chris Cummings, could see his side of things.

Several IFAs who are not already Aifa members said they will definitely join up when they get back onshore. One message from Cummings that did get through was the fact that the banks are already pulling out all the stops to reverse the RDR and that it is essential for advisers to stay alert and united until the final paper is decided.

Keith Richards of Tenet expressed surprise that the banks are so worried about losing the adviser label when, for starters, they did not always use the term anyway and, second, other parts of the paper give them a fantastic opportunity to distribute financial products.

That is an argument that will probably have the British Bankers’ Association’s Angela Knight choking on her cornflakes as she reads this morning’s Money Marketing but it is certainly an interesting point.

Apart from this, the hottest potato on PIMS appeared to be the active versus passive argument and a continued debate about stochastic modelling and how some planning software in the last two years has suggested putting 20 per cent or more of portfolios into commercial property. One planner said a little bit of the human touch might have introduced a bit more common sense when such a strategy was suggested.

Overall, however, the mood about the advice business was good. Where advisers were more pessimistic was on the economy. There was a definite “feelbad” factor over the property market which even specialist investment advisers said was feeding through to their business.

There is not a great deal of confidence among clients although all the businessmen and women I talked to on board were convinced that their advice would prove to be robust, whatever the economic climate in the next few years. One adviser, admittedly after a few beers, was expecting economic Armageddon. Another adviser said the capital gains tax reforms had encouraged some clients to sell their businesses which left them with a pile of cash to be invested and advised upon, so there always seems to be a silver lining.

One message that this newspaper will certainly be sending out is that in desperate times, some people do desperate things. There is a great deal that can go wrong and things have arguably got a lot more difficult for those in the middle of changing model, given the strain it can put on resources, at least in the short term.

But I did get the feeling that the advisers at the conference are prepared for the worst and will not be doing anything stupid in the coming months. There will be no return to precipice bonds – the classic example of a product sold in high numbers partly because of a downturn. Most advisers will now be wise to such things, even if they were not in the first place.

PIMS itself has professionalised, along with the advisers, and most delegates seem to be shipshape for advising in these economically uncertain times.

John Lappin is editor of Money Marketing


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