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Forward thinking

Two things always remind me that it is Christmas soon – the Sofa conference and the realisation that I have to write the Christmas cards as they start to arrive from elsewhere. Luckily I decided to stop sending cards to my clients last year and donated the cost to charity. This year, I will do the same.

The Sofa conference is an excellent networking affair and this year the two key topics over coffee seemed to centre on PI and the soon to be published, and much awaited, consultation paper on education standards.

We were fortunate then to benefit from two presentations from the FSA on these hot issues. The delegates seemed to feel that the regulator was beginning to understand that the problem with PI may not be that easy to solve and were alert to the problems.

All in all, David Kenmir from the FSA gave a good account of himself and his team. The real test will be in how we align the needs for consumer protection with the practicalities of the insurance market.

If we are to pursue the non-negligence approach, then PI will never be right, irrespective of overall market capacity. Essentially, we need cover which deals with misselling but this means we must have a definition of misselling.

There is no way that we can solve the PI crisis if the FSA persists in looking backwards as opposed to looking at the practices that will cause problems in the future if no action is taken.

On the education front, the paper presented to us underlined the move to an overall system of competence for the entire marketplace and made me consider how unappealing this would be to those advisers who had stuck at FPC level and were unwilling to take the next step to AFPC.

If they want to continue as IFAs then they will face the challenge of competing with the adviser who has gone the extra mile. For them to try and charge more than the AFPC-holder could prove to be their undoing as the menu focuses on the hourly rates and the level of competence could soon become the key factor which sets hourly rates.

The segmented but connected map in the consultation paper does allude to the outstanding matter of titles or the forest of initials, which need serious pruning.

Where someone has gone no further than FPC, the idea that they can use initials after their name is likely to be removed when the proposals under this consultation paper come into effect.

Whatever the FSA decides, it is essential that we ensure that the job titles reflect that what someone actually does and who they are ultimately working for is the client or their company. There is no doubt in my mind that a chartered title can take care of the more professionally qualified advisers but the real challenge is what we call the benchmark qualified “adviser”.

Sandler suggested “financial product distributor” but this is more akin to someone selling door to door and does not really help the public.

The other key point is the definition of advice and here I side with Ron Sandler when he said that advice was an amalgam of information, advice and execution. Is it any wonder that the client is unclear where the added value lies?

If we are to survive as professional advisers we must all make the move to the level of chartered status. If nothing else, it will help us to increase our hourly rates.


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Guide cover

Guide: Johnson Fleming produces auto-enrolment checklist

For a job as big as managing the auto-enrolment changes, it’s important to know what has been completed and what still lies in front of you to give you the reassurance that everything is in hand. Getting the planning and project management right at the outset can help you see the path ahead and ensure everyone knows their roles and responsibilities. To help with this, Johnson Fleming has produced a checklist outlining every step that needs to be taken when preparing for auto-enrolment.


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