I generally try to seek out some kind of redeeming balance but this is not viable where no mitigating factors exist. This is such an instance – bluster and puff cloaked by the omnipresent shadow of self-interest.
Fisher’s letter firmly placed the blame on “so-called advisers… incentivised to direct clients into inappropriate debt”. He railed at the commission-based nature of financial transactions which, he claimed, pay up to 10 per cent of the capital investment. Personally, I know of no investment which pays 10 per cent commission and even if available, I doubt many advisers worthy of the name would approach within yards.
This tirade is not new. In fact, it is boringly familiar, as witnessed by the tumult that accompanied the start of the retail distribution review consultation. Indeed, were it not for the propensity of journalists to shower publicity on this tawdry tub-thumping, we would not find ourselves distracted.
Nevertheless, Fisher’s views have been given exposure and need to be shot down before they breed and multiply.
Lest we forget, Towry Law is the company that jumped ship from Aifa due to differing views concerning the RDR. It is also the business that cost advisers millions of pounds in Financial Services Compensation Scheme levies and subsequently soared phoenix-like in its minty-fresh anti-commission guise.
Fisher drags out the usual comparison between advisers, accountants and doctors and makes the mistake of shouting for advisers to be “professionals” when all that is required is to be professional.
Cynically, his call for a ban on commission is made with the comforting knowledge that Towry Law’s business model is fee-based wealth management and therefore not reliant on dealing with everyday clients. The majority of advisers work with the lower net wealth segment and have discovered that, in the main, they have a preference for commission over fees. As always, it is not about favoured business models but about trust.
If Fisher’s ambitions are realised, the financial services landscape will present a dour face to the typical consumer.
Will Towry Law be interested in advising on a £15 a month family income protection plan? Will this sizeable segment of the population be consigned to the mercies of the bancassurers?
Will financial advice be enhanced by this so-called fee-only model or will it sound the death knell for independent financial advice to all but the wealthy?
When discussing fees v commission, attitudes tend to be entrenched although I believe all advisers would gladly work on a fee basis if clients were both able and disposed to pay them. After all, commission is a fee that has been factored by the provider and the bigger the contribution, the higher the commission payable. This is not monumentally different from a firm such as Towry Law charging 1 per cent of funds under management as well as 1 per cent up-front. Every business aims for a profit and whether it is a bonus, profit-sharing, performance fee or commission, the important factor is client care and not the name of the business model.
If Fisher was truly intent on grasping the moral high ground, he would insist that his consultants work on a true hourly rate – of course, this would reduce Towry Law’s profits appreciably.
This tiresome debate will shortly be energised by the FSA’s RDR vision. Those advisers like me who feel a social responsibility to promote independent advice to the lower earning sector (as well as high-net-worth individuals and corporate clients) will watch with trepidation as the decision-makers foist their latest big idea on to the industry.
Will we applaud our fate like the proverbial turkey at Christmas or will we fight to retain the sanctity of independent advice for our less well-heeled, non-fee-paying clients? I wonder.