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Devil’s advocates

Following Money Marketing Live, the financial services chattering classes have the future of distribution at the top of their favoured subjects.

Packed conference rooms heard the senior employees of product providers talk about how factory gate pricing already exists, how the industry would be damaged if the retail review became a straight fight between fees and commission, how direct salesforces are dead and how the simplified regulatory regime should not create a two-tier system that discriminates against IFAs.

Er, have I been sleeping for the last year and missed how the industry has got to this point in its thinking?

Show me a perfect factory gate model, the fees versus commission debate has raged on since before depolarisation, direct salesforces will become more popular in the future and the system has always discriminated against IFAs as the providers still hold the balance of power.

Meantime, JS&P Towry Law chief executive Andrew Fisher suggests that the mass market should not use IFAs and should instead rely on product providers to dish out basic advice. When did we move away from IFA Promotion’s raison d’etre for the last 10 years, which is agreed by all the major providers that sponsor IFAP, that independent financial advice should be:

– Affordable. The option to take independent financial advice should be available by right to all, not just the wealthiest in society.

– Convenient. IFAs should be available in the location of the consumer’s choice, wherever they live in the UK.

– Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.

How can a member of the public be expected to understand what the status of a financial adviser truly means? We still do not have an FSA definition of what a fee-based adviser is.

JS&P Towry Law may be banging the drum that fees are the way forward for the wealthy while positioning itself as being fee-based but I would be interested to see how many of its advisers take indemnified commission, trail commission or fund-based commission.

To me, there is nothing wrong with commission when taken by a professional IFA who has proved he has found close to best advice for his clients. Before my mailbag explodes telling me there is now suitable advice, not best advice, I will ask you, show me a good IFA who does not seek best advice for clients.

Research carried out by Axa last year compared a sample of families in the Bristol area where independent advice was provided with families who had not received advice. The improvement in financial status of the first group was considerably notable.

I find that most people who have been client-facing as financial advisers are passionate about the industry. They see how effective financial planning helps improve people’s lives.

The Association of British Insurers is calling for lighter-touch regulation for direct salesforces. I would like to see many more employees from product providers spending time as financial advisers so that they understand how holistic advice is provided and not just a product push.

Giving up independent status to be a single tie or direct salesman is like selling your soul to the devil as it is only cash and simpler processes and restrictive choice that drive the decision. If anyone can build a case that single ties or even multi-ties are better for consumers than independence, I would like to know about it.

To treat customers fairly, the FSA notes that product providers and distributors have differing but related responsibilities and should work together more closely. Is this not what distributors have been trying to do over the last 100 years?

Kim North ( is director of Technology and Technical.


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