As the Apfa AGM looms later this week, it will be a year since we changed our name.
I do not consider this as a first birthday, as the name change was necessitated in order to carry on representing financial advisers. But it marks another year in which much has happened.
Most obviously the RDR came into force and the FSA was replaced by the FCA and PRA. We have yet to see the full impact of the RDR which I believe will take some years fully to bed down. But we have already seen a sharp reduction in adviser numbers (even if there has been a small boost from those who just missed the deadline).
Next year will provide a better picture of the overall impact on business as we obtain full year data on profitability, turnover, and client numbers.
We remain concerned about the effect on the client in terms of access to advice and the viability of providing advice to those clients with fewer assets. We are preparing evidence for the FCA’s post-implementation review due in 2014, in which we will press for stability for the sector.
The fall in adviser numbers and the rising cost of giving advice places greater focus on the ability of consumers to access advice. Apfa’s Regulatory Dividend campaign is aimed at lowering the direct and indirect costs for an advisory business but not the standards of consumer protection.
We believe the FCA could do much to help, such as address adviser reporting, regulatory fees and the introduction of a long stop. We need a regulatory framework which is proportionate and enables a functioning market for advice not one that suffocates it.
So it is with this hope we welcomed the creation of the new regulator. The FCA has set out an interesting agenda that promises the potential for better regulation. Greater transparency; more emphasis on markets that work rather than rule making; measurable performance indicators; and, not least, better value for money. So far this has been promising talk.
The coming year will see whether the FCA can deliver on this. Apfa will be monitoring progress. I think there are some positive signs on fees and we will work with and support the National Audit Office in its proposed review of the FCA for value for money – finally providing some much needed scrutiny of regulatory costs.
An issue of increasing significance and one where advisers will have a positive role to play will be financial planning for retirement.
As the state steps away from provision for retirement needs, individuals increasingly need to look to their own resources and manage them effectively. Policy issues such as pension provision, auto-enrolment and financing long term care highlight the need for effective advice and planning. This is an opportunity to demonstrate the value and need for financial advice. Promoting financial advice as part of the solution enables Apfa to support a healthy and growing advice sector.
So we head into our second year as Apfa with 2014 approaching. From everything I see, there will be a continuing, if not greater need for financial advice, and Apfa will be doing all it can to bring about the best environment for financial advice businesses.
Chris Hannant is director general at the Association of Professional Financial Advisers