From the FSA’s retail distribution review consultation paper, published last Thursday, it is clear the regulator wants advisers to raise the bar in terms of educational standards, clear and transparent fee charging and removing the reliance on providers to pay commission.
I say, not before time. Financial services is desp-erately in need of a shot in the arm if it wishes to compete alongside other professions. Hopefully, this is just the beginning.
Individuals entering into medicine, dentistry, law, surveying, architecture etc, all have to go through stringent study and examination before they can qualify. Then, if they wish to go on and specialise, more years of study and assessment are required.
However, some financial advisers seem to think it is unnecessary for them to take more qualifications, deeming their years of experience as sufficient. At a recent conference, I asked delegates how they would feel if the surgeon about to operate on them admitted he or she had no qualifications but plenty of experience. One gentleman was emphatic in his preference for the surgeon with experience rather than qualifications. I omitted to tell him about the poor patients who had suffered at this surgeon’s hands.
Qualifications are not the complete answer. Of course, experience and personal skills are essential in forming the well-rounded adviser who can steer clients along the right track to achieving their long-term objectives.
There is no question that advisers need integrity but they also need to be commercially aware. Even employees need to show good business sense if they are to demand fees commensurate with their services in a way that the client finds acceptable.
For those who have not yet reassessed your business model or addressed the issue of how you will operate post-RDR, it is inevitable that soon we are going to have to be more professional and charge fees in a clear and open manner. Any businesses that have not yet taken steps to accommodate some or all of these issues may struggle with the change.
If you have not already done so, now is the time to get into gear and review where you want to be in the new world. There is plenty of help out there in terms of academies, consultancies and other advisers who have already taken the plunge. There should be no excuses for transforming the way you work if you genuinely want to help rebuild consumer trust in the financial services as a profession. Is your business fit for the future? There is no time like the present.
Marlene Shalton is a financial planner at Bluefin Wealth Management