There has been much vitriolic comment and angry reaction from IFAs (including myself) in response to the FSA's ill-advised proposals regarding IFA commission and the changes to polarisation. With the exception of a few fee-based IFAs, who have my respect, most of the IFAs and industry commentators I have spoken to seem to be singing from the same hymn sheet on the commission issue.
Now that we have all vented our spleens to the trade press, I suggest that, for once, instead of just moaning to each other and anyone else who will listen, we all get together as a united force within our industry and make our voices and those of our clients heard.
It is imperative that we all make our views known to the FSA between now and April 19 when the “consultation period” ends. I have already written to the Chancellor of the Exchequer and I will shortly be writing to the FSA to make my views known.
More important, though, I am going to write to all my clients and explain what the effects of the FSA's proposals will mean to them. For instance:
1. If they want me to continue to provide them and their families with independent financial advice, they will have to pay me up-front fees for my services because I will no longer be able to receive commission when we conduct business together.
2. In future, as my time will be money, if they want some generic advice about Fred's company pension scheme, Sharon's cash mini Isa or granny's National Savings Pensioner's Bond, it will no longer be a free chat over coffee and biscuits. They will all get a bill for my time.
3. There will be no more free annual reviews to keep a check on their progress or the state of their investment portfolio. There will be a bill for my time every time I go out to see them.
4. There will be fewer home visits in the evening. As travelling will use up my valuable time, more of my client meetings will have to be conducted at our offices during business hours.
5. For those clients who only occasionally do business with me, I will start charging a retainer fee each year in order to make our relationship commercially viable.
6. There will be no more free quarterly newsletters or Budget updates. I will have to charge for this service in future.
7. When they ask me to pop round on my way home to help them fill in their tax return, they will receive a bill for my time.
I am also going to tell my clients that if they do not like the above options and would prefer for me to continue to be paid on a commission basis, they can do something about it. I will encourage them all to write to their MP and directly to the FSA to state that:
1. They have always been happy with the financial advice I have provided.
2. They are happy for me to receive commission for the policies I have arranged and will continue to arrange for them in the future.
3. They want to continue to receive impartial and independent advice from me.
4. They do not want to have to pay me fees for that advice.
I will even offer to provide them with a draft wording for such a letter which will be available upon request by post or email.
I like to think that I have a very strong relationship with my clients and that many are now friends. I guess this issue will test just how strong those relationships and friendships really are. It is a gamble I am prepared to take and I urge every other IFA who does not want to see the end of commission payments to carry out a similar exercise as soon as possible.
The FSA has obviously chosen to ignore the views of Cap Gemini Ernst & Young, the Consumers Association, Aifa and all the industry figures and IFAs who have been brave enough to stand up and air their views.
However, it will not be able to ignore the views of thousands of IFA clients from all over Britain.
So, if you do not want the FSA to completely screw up your business and our industry, please do not waste time and energy talking about this issue to each other. Talk to your clients and ask for their help. Get them to write to their MP, the FSA, the Chancellor, the Prime Minister and anyone else who can make a difference.
Stop whingeing and take positive action now before it is too late for all of us.
Senior IFA,Legacies Asset Management,