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Catering to the menu system

The TV show Can&#39t Cook Won&#39t Cook is a favourite of my daughter&#39s and I have to admit having seen it more than once. All this talk of menus reminded me of this and I started to see some uncanny parallels.

In the show, the two sides have a limited budget from which they buy the ingredients and the two chefs then have to conjure up an appealing meal.

Under the proposed menu system, we too have a limited menu as the ingredients seem to be limited to the “super-products” such as personal pensions and investment bonds.

Having worked my way through the documents (over 150 pages), my one light moment was spotting that in setting the range of commission for a specific product, the range does not need to reflect what the IFA has charged in the past.

Or, if you like, the FSA continues to refute any links to “past performance” in respect of investment returns or commission.

The problem I have with the document is that it seems to have been written to protect the status quo, not from the perspective of the IFA but from the protection of distribution for the providers.

There is no recognition of financial planning in these menus, where the product is the last element as opposed to the first port of call.

To illustrate a multiple product purchase or even a wrap, this system may be found wanting but, apart from that, this document has other aspects which will greatly affect our sector.

The use of industrywide commission levels in the level two option will ironically hit many of the major IFA firms a lot harder than the local or provincial IFAs. In general, they have tended to negotiate higher levels of commission but retained it and this system should make that more difficult for them.

It is also possible that the menu will lead to marketing campaigns focused on price, with advice a poor second or, more likely, not even bringing up the rear. But is this not the price we have to pay for having the product providers paying for our representation and promotion? If we really want to move forward, we need to be proactive and take new ideas to those in power. Waiting for the next ambush is never a sound strategy.

But to do this will require the IFA to pay their own way and hire professional lobbyists to state their case again and again. The focus has to be on advice, which is what we will ultimately be selling in the future.

Despite my concerns, there is no doubt that the menu is a step forward for the mass IFA market but I believe that, in losing the defined-payment system, we may find that Sandler&#39s non-toxic stakeholder-like products could be swept into a RU64-style regime.

In other words, we may not use the products but the charges could still become the benchmark. After all, why would a high-net-worth client pay more in charges than someone buying with no advice? Any lobbying has be done with an all-permutations-considered approach, as winning the DPS fight could ultimately be seen as a pyrrhic victory.

Returning to the world of catering, I noted that the question of hygiene was in the news this week.

Taking my lead from the “Now wash your hands” campaign, perhaps we need a similar slogan: “Now show them the non-toxic products.” Or will we just hope that our clients will be more discerning and, like celebrities, continue to order “off menu”.

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