Each year the PFS undertakes a member survey. It is important for us to know what members think about the services we provide and to understand the direction of travel of both individuals in their personal development and their businesses. This year’s results provided a valuable insight into a range of topics including RDR readiness, challenges and opportunities.
Let’s start with a positive message; 90 per cent of respondents felt they were RDR ready. Of the minority who are not ready, around half still need to complete gap-fill and the rest, either to complete the level 4 qualification or obtain an SPS. Eighty per cent of respondents considered their firms to be ready and outstanding matters were much as expected, with the majority of those who felt employers weren’t ready suggesting they needed to implement new service and cost disclosure documents and establish adviser charging models. If this statistic is representative, one in five firms needs to seriously get a move on.
For the rest of this article, I would like to concentrate on the direction that businesses are following. The survey revealed that 58 per cent were basing their advice charge for new recommendations on the value of the investment, a slight drop from previous surveys, with the alternatives being fixed rates at 23 per cent, hourly rates at 12 per cent and retainers at 6 per cent. Some 71 per cent intend to use fund based remuneration for ongoing services.
We also wanted to find out more about the type of business being undertaken so introduced some new investment related questions this year. Having listened to numerous debates on active versus passive funds, it was interesting to see that 50 per cent recommended only active funds, 44 per cent a balanced blend of both and just 6 per cent passive only. Almost half applicable respondents stated their firm offered model portfolios with a further 26 per cent offering the service through an outsourced facility. In contrast, 55 per cent offered clients discretionary investment services but the majority (42 oer cent) used outsourcers.
We also asked about threats and opportunities over the foreseeable future and unsurprisingly, 8 in 10 members felt that the cost of regulation and compliance was the biggest threat to the success of their business over the next 3-5 years. On a brighter note, there were a range of views relating to opportunities, with the top five being:
- Fewer, more professional advisers
- Higher professional standards
- Referrals from professional connections
- Greater transparency
- Economic recovery
Looking at the top three, it is hugely encouraging to see that most members see the higher professional standards that many of you have worked so hard to achieve are now being viewed as a business opportunity. This philosophy should now be applied to CPD, which should be carefully selected to ensure your time is well spent and the output adds value to your businesses. Undertaking CPD simply to clock up the required hours it is a business expense, so plan your activities well.
Fay Goddard is chief executive of the Personal Finance Society