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Eyes on the prize

Where were you on June 25 when the FSA launched its consultation paper on financial services retail distribution?

The review it does have the potential to revolutionise how consumers experience financial advice in a big way.

I expect by now that most of you are suffering from RDR overload – fed up with hearing the numerous views and analyses.

Of course, there are concerns, details to finalise and practicalities to resolve but I do not want us to lose sight of the fact that the proposals represent a major step to a more professional finan-cial advice market.

I believe that we have the potential to significantly change how consumers view the sector and move to a more professional standing, where the public genuinely value the advice they get.

Attaining the higher qualification will be a tough task for some but I believe it is necessary to build the financial advice profession we need and desire.

Progress is well under way ahead of the 2012 deadline. We have seen record numbers of candid-ates booking to sit the Chartered Insurance Institute’s diploma exams, already 114 per cent of the total for last year.

Further good news is that, of those currently sitting the diploma exams, 94 per cent are completing the qualification within two-and-a-half years, with 82 per cent completing within two years. These statistics show that it can be achieved within the 2012 deadline.

The prize for the industry is to become a real profession in the public mind and to unlock a whole new generation of talent keen to enter the profession.

Graduates who hitherto have largely neglected a potentially rewarding career as a financial adviser for more presti- gious areas such as investment banking or accoun-tancy are sitting up and taking notice. Is this a new profession on the march? You bet.

Our chartered financial planners now total 1,700 and being chartered is unquestionably the future for anyone seeking a career in financial advice and planning. The dramatic rise in chartered title-holders from a standing start four years ago is inspiring.

In our recent consumer research, 58 per cent agreed or strongly agreed that they would have greater trust and confidence in the advice from a char-tered professional compared with professionals who were not chartered.

There are significant challenges ahead, there is an oppor-tunity to meet the original objective of the FSA to raise levels of public trust and confidence.

We have the opportunity to build on the major progress already made and demonstrate to the public the valuable service we offer – and one that can be trusted.

Fay Goddard is chief executive of the Personal Finance Society


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There are 15 comments at the moment, we would love to hear your opinion too.

  1. Who do you represent Fay – can’t quite work it out!
    Who do you represent Fay? Could it be the consumers, your members or could it be the CII? James Hay Wrap research shows IFAs average age to be 54* and latest FOS figures show this same group is responsible for only 3% of complaints, compared with the 59% via the banks*. And yet your views betray the very advisers you claim to represent! The independent model is not broken and yet today an industry with an average age of 54 years, is being asked to undertake 400 – 500 hours of professional study, equivalent to 1st year degree standard, the price of failure being the loss of their lively hood and business which for most has taken many many years to build. By 2012, this RDR requirement will leave as many as 2 million clients without an adviser, as calculated by Ernst & Young, who say that 10,000 IFA firms will leave the industry, leaving the banks to mop up. If you think any graduate would come into an industry regulated under the FSMA and give up there rights under the ECHR Act, rights that you don’t seem too concerned over then you are even more deluded than your MM statement suggests.

  2. out of touch
    Fay over the years I have treated you with respect, often when I disagree with your views. Now I am sick to death of your obvious stupidity. your statements show that you have no grasp of what is happening to the best distribution method. THE Profesional IFA is being hounded out of business by self interest groups… The Banks and their alies, the FSA the insurers, the so called profesional associations who charge the earth for more and more Qualifications…. at 61 with nearly 40 years as an IFA behind me tell me why I need to take further qualifications? has the Treasury Minister done a degree course to be the Minister ??? he gets everything compleatly wrong and then moves to another Ministerial job he is not qualified to do!!! experience and reputation is being ignored by RDR.

  3. Fact and Fantasy
    Come on Fay – you’re catching the same disaease as the interfering FSA – spouting off comment about how wonderful the RDR is going to be so that the ‘broken’ IFA can be fixed – BUT for who ? – not for ALL of the consumers and shouldn’t the Regulator be overseeing a system that is fair and benficial for ALL consumers while operating a fair system for all advisers/brokers/salemen to earn a living. The RDR will introduce a financial aparthied where anyone who cannot or will not pay fees will be pushed in to the open arms of the rip off banks. Where are your comprehensive research results and facts to back up your wonderful view of the ‘Financial Services Rainbow’ – it could all end in tears and the only ones left standing will be the overpaid regulators and the banks each with their own pots of gold. While standing on the periphery will be small groups of ‘Professional’ Accountants, Solicitors and of course IFAs – exclusive little clubs for the wealthy. Your research shows that nearly half of respondents seem to have no inclination whether there is chatered status or not (is it half full or half empty? ) – and it would be interesting to know if you asked the 58% what kind of fees they would be willing to accept to pay to set up a £100 per month investment ISA. The vast majority of consumers do not need or want an over qualified practioner – they want someone who can deal with their needs on their level. — PS In previous market research 9 out of 10 owners said their cats preferred a particular brand of cat food – the market research was done to solely help sell the product – can you go away a get a proper bit of research done which really asks all of the questions not just the ones that give you and the FSA and the other pro RDR vested interests the answers you want to hear !! Overall a very disappointing article to read from someone who is supposed to be representing us the down trodden advsers.

  4. Scott craig, Cert PFS 12th August 2009 at 8:18 pm

    Fay Goddard: what planet do YOU live on????
    With pass rates in the order of 40% due to the exams being irrelevant, full of obscure questioning techniques and answers forgetable after one month of studying, as the exams asks questions that are generally not necessary for 99% of your client’s requirements…With not one client on mine wishing to pay for higher qualifications, as not one of them have complained about my service over 17 years..Are you willing to take 400-500 hours UNPAID time to prove to ME that you know what you are talking about in the REAL world???

  5. Ned Naylor - IFA 13th August 2009 at 9:33 am

    Anyone who thinks that RDR proposals are going to soleve the savings and pensins deficits and encourage consumers to save is delusional.
    People don’t buy cars, they are sold them.
    People don’t buy houses, they are sold them.
    People don’t buy financial products they are sold them.
    If there is a genuine desire to protect consumers from so called “commission bias” then make all products pay an equal level of commission, the price of the products can be determined then by how efficient the life or investment company is at administering their business and keeping costs down. The FSA has failed us all in so many ways, Eq Life, RBS, Keydata to name but a few, how is this organisation fit for purpose. it is clearly run by incompetant individuals who have never had to deal with widows or pensioners who haven’t enough to live on, because someone didn’t sellthe right level of protection or perform proper effective pension planning.

    The RDR is not a prize, it is anti competitive and sidelines millions of consumers who could not afford to pay professional fees.

  6. Facts not Biased Opinion please
    Why do those who claim to be ‘professionals’ in the financial advice service industry seem so hell bent upon its total destruction. Fay, Do you dispute that vast swathes of experienced IFAs, who are honest, reliable and, most importantly, highly valued and trusted by their clients, will be driven from their lifelong careers? And do you dispute that millions of members of that public, for whom you so piously claim to speak, will be driven to seek the advice they need from banks that have demonstrated their sales culture so visibly in recent years and months? Yes, the advice industry needs new blood, and yes, a higher entry level may, in time, produce an improved quality. But by that time the banks may well have cleaned up the clients needed by that new blood. My greatest criticism of your comments, however, relates to your acceptance of the FSA mantra that the public trust needs to be increased. May I suggest that you look at AIFAs statistics on public perceptions of IFAs and the level of trust they enjoy. Amongst those that use an IFA it is remarkably positive. Lack of trust in financial services is lack of trust in Banks and particularly in financial advice from Banks. Instead of meekly accepting the oft told lie, (simlpy because it happens to support their vested interest). IFAS and their representatives (including the PFS) need to stand up and ask in a very loud voice why it is that the FSA intend to dessimate the most trusted sector, and hand the ball to the least trusted,

  7. Neil F Liversidge 13th August 2009 at 10:19 am

    Hi Fay, I hope the weather is pleasant there in Cloud Cuckoo Land. My clients range from a lady worth half a billion to some on benefits. Whilst wealthy clients are happy to pay fees, poor ones can’t and I don’t be the one signing them up for loan agreements to pay for the advice they need. We aim to get clients out of debt, not deeper in it. Every time I get a member recruitment call from the PFS I tell them “Not while it’s chaired by Andrew Fisher.” Now I shall have to add ” and not while the Chief Executive is delusional.”

    PS:Fay, your PFS colleague Andrew Fishers is also very keen on Chartered Status back at Towry Law. I note that Towry Law: 1.Put their miselling liability onto the FSCS for commission paying IFA’s to fund? 2. Define fee paying as 2% trail fee every year on investments of £100K plus? Is this your shared vision of the new professional future for PFS IFA’s? Or perhaps you don’t represent your members, you represent the CII lobby to gain greater fee income from exams! Together with an Andrew Fisher Towry Law carve up of the industry!

  9. Eyes on the prize
    The thing that’s really broken is not the distribution model but the regulatory model. I have, for example, no problem with CAR, be that by deduction from what is invested into the recommended product or by way of a fee or a combination of the two. The client should know what he’s being charged and by what mechanism. But I do object to having to spend hundreds of hours studying for exams to learn all sorts of stuff that in practice I am highly unlikely ever to need. For example, if approached by a client seeking advice on how best to deploy a £2m pension fund, I would probably admit that such a project is beyond the scope of the services my small practice can provide and refer the enquirer to a practice specialising in heavy, complicated stuff like Phased DrawDown. The FSA’s claim that advisers must achieve higher qualifications seems blithely to assume that the average General Practitioner IFA would, in the above scenario, take on such the case and either mess it up or in some way give inadequate advice whilst at the same time ripping off the client for lots of commission. The vast majority of GP IFA’s would not and even if one did, we already have a raft of consumer protection mechanisms as well as just about the costliest PI Insurance cover of any trade in the land. But, for the FSA, enough is never enough. As I see it, the two most glaring deficiencies of the RDR are the lack of any cost:benefit analysis (which seems odd, given the FSA’s enthusiasm for spending millions of pounds of industry money every year commissioning outside surveys) and the lack of any research into whether or not there is any perception on the part of the public that their IFA is lacking in technical knowledge. Obviously, a lay person wouldn’t be able to make such a determination, but the litmus test is how many of the precious few complaints raised against IFA’s are based on a claim that the IFA recommended one thing without having discussed an alternative that, with the benefit of hindsight, might have been more suited to the client’s requirements. The biggest reason for resistance to studying for exams is the irrelevance of most of what will have to be learned and regurgitated in the exam room merely to notch up points. Is it worth the effort for the likely benefits to me, to my practice or to my clients? An awful lot of IFA’s are saying no it isn’t and are voting with their feet.

  10. The Model Is Broken
    In our wonderful PC world we have protected minorities where releigious, ethnic and other prejudices are outlawed. The rationale being that we all have a right to live our lives as we see fit – as long as we do not break any laws. The FSA and other similarly interested parties such as the PFS wish to divert advisers to their particular view of how the industry should be. Experience tells us that these views are generally born of a desire to take advantage of a particular landscape. The majority of advisers and their clients desire stability and the right to choose the the particular remunderation mechanism that suits them. Having busy bodies, whether regulators or self-interest groups, lecturing us on the way forward is becoming tiresome.

  11. RDR
    I wonder if the PFS have actually polled its membership to understand our views on the RDR. An unecessary upset iand cost n very difficult times, risks driving IFA’s out of the market, the fee/commission bit is market interference by the regulator with unsubstantiated arguments in support. Capital adequacy (I know its not in teh RDR, but it is sneaking in at the same time as a totally unnecessary, and again unsubstantiated increase – ask you accountant or solictitor what their cap ad requirements are.

    I could go on, but will leave it to others to add to these points

    YOU SAY:
    Graduates who hitherto have largely neglected a potentially rewarding career as a financial adviser for more presti- gious areas such as investment banking or accoun-tancy are sitting up and taking notice. Is this a new profession on the march? You bet.

    I SAY:
    Well Fay I do bet – I bet your wrong! Graduates will not enter a profession that applies rules and regulations retrospectively, has an Ombudsman that does not follow rules of natural justice and all with a power to fine up to £100K with even a right of appeal.

    And you Fay Goddard seem to do an say nothing other than appease a regulatory bully that hasn’t even conducted a cost benefit analysis on RDR. Well Fay you had better make a killing on your exam fees because sure as anything your views will reduce you membership yet further. Get Andew Fisher on his Towry Law soap box and you’ll make a right pair!

  13. What a Load of Tosh
    The lady obviously does not live in the real world. Very similar to the Executive and the FSA and most of our MPs and members of the upper chamber

  14. Fay, I have been waiting 20 years for the Prize… call for Action.
    Fay, I have had my “Eyes on the Prize” for over 20 years of dealing with the “challenges” of pointless/ill conceived regulation. Sad that you appear not to see what many IFAs’ can see – RDR is flawed. I have just resigned from PFS in protest at your views. It won’t make much difference of course if only a few of us resign. Enough raindrops wears down granite. A light shower is a futile gesture.

  15. I resigned last year
    I don’t agree with you nor the PFS, nor the FSA. It is ironic when you think how many of us it appears disagree with the FSA and PFS/CII considering how many have already left the industry. It would be interesting if those who left in say the last 5, 10, 15 and even 20 years were asked their opinion, let alone those still practicing. And before you ask, I have responded to most if not all the RDR discussion papers (I’ve given up now, simply because with no longstop, I am completely oppossed to the whole F-pack as they have overridden our common law rights with NO prior agreement and YOU LET THEM). Like him or not, at least Evan Owen has been vocal enough to say this is morally indefensable and that is why I have supported him and IFADUs stance on the Longstop issue since I realised retired advisers were being pursued illegally with OUR fees. I told Amanda Bowe (on record) if the longstop issue was not resolved with the RDR, then it would be a fight we would all be looking at and it was time to pick sides and that should include those IN the F-pack deciding whetehr they wished to condemn or condone their colleagues actions as just as with the Geneva Convention, an illegal order remains illegal and it is for the idnvidual to act and NOT carry out illegal orders of the executive or face punishment.

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