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The challenges facing advisers – then and now

A panel of advisers today reflected on the challenges facing their profession and how these have changed from before the introduction of the Retail Distribution Review.

In a live debate chaired by Money Marketing today, four advisers debated the role of technology in the advice process, the different fee systems, the advice gap and financial regulation.

They also discussed the return of high street banks into advice.

Despite the increase in technological disruption in financial services, Holland Hahn & Wills chartered financial planner Amyr Rocha Lima says there is still a lack of tech support in having a back office that helps the adviser focus on the client rather than just store information.

Rocha Lima, who became a planner on first day of the RDR, says the way tech has advanced means advisers can spend more time with their clients, but JP Morgan Asset Management head of retail marketing Keith Evins says technology “hasn’t brought more people to the table”, meaning there is much more advisers can achieve with it.

For Verve Investment Planning IFA and principal Steve Buttercase one of the biggest problems in the industry today is the lack of financial education.

He says while advice seems to be only accessible to the wealthy, there are other issues the industry needs to solve.

He says: “The cost of regulation has meant more investments in systems and [financial education] is the biggest problem the country faces. In the past LV= and Prudential were doing ‘penny savings’ and those solutions have gone now.”

Klonowski & Co chartered financial planner Francis Klonowski argues advice fees based on assets under management is what prevents savers from accessing advice.

He said:A lot of people need to invest more. If you rely on AUM fees then you can only concentrate on people that can pay for advice.”

While Evins argues the AUM fees system has made advice “more valuable”, however, Klonowski does not agree.

He says: ”I am not sure it does. Virtually no one talks about fees and what this adds to clients.”

Rocha Lima adds: ”My friends would pay a monthly fee for someone to help them with financial advice. We don’t have AUM fees, we are building that. As a financial planner I tend to focus on retirement planning, but I don’t think anybody is against fixed or AUM fees.”

As the advice profession evolves, Buttercase says advisers are still distributers for product providers and continue to facilitate product selling while offering services.

Commenting on the recent Tata Steel scandal, Buttercase says many advisers tapped into that market moved by greed.

He says: “Advisers going there is because there is money. That is what it is and if the industry is driven by money it is going to do bad things.”

Klonowski recalled the “early days” of the IFA profession when they were compared to miners.

He said: “What is the difference now? There are schemes that fail or that don’t meet the liabilities. There must be a limit of what a pension fund can tolerate. I feel sorry for the people in Tata Steel that have that problem. It is a dilemma now compared to 1990.”

Responding to a question from the audience on mainstream banks going back into advice, panellists welcomed the trend.

Evins said banks returning to advice could be “a good thing” and a possible solution to the advice gap. He says: “We need to get the savings and investment culture more across society.”

Greenly agrees saying more banks will allow third party firms to plug into challenger banks allowing savers to buy life insurance or top up their pensions.

But Klonowski is doubtful on how banks can deliver advice in the future.

He says: “I don’t know where this advice will take place. But if they are closing all these branches and it does inconvenience to a lot of people, people need to sit down and talk to their manager and talk about mortgages. So why are we going to believe banks?”


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