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Head in the lion&#39s mouth

Some time ago, I attended Wembley to watch England play Scotland in the second leg of the Euro 2000 play-off. I had assumed, wrongly, that I would be at the Scotland end but found that my ticket placed me among the England fans. What followed was the longest night in my memory as I had to remain silent for over three hours – one-anda-half hours for the football and a similar time just to leave the vicinity.

I vowed that never again would I stray into the lions&#39 den – especially when there are three of them. It was a case of being in the wrong place at the right time and, as someone more eloquent than me once said, timing is everything.

To hear of product providers making investments securing minority interests for majority prices, one could be forgiven for thinking that something is amiss. For, in the big scramble for distribution, some decisions will most certainly prove to be imprudent.

Although we are still waiting for Sandler&#39s report, there is no doubt that more charge-controlled products are on the way and Legal & General&#39s recent move on pension commission is probably the first of many. This pressure on margins will start to feed through to profit and loss accounts as the year progresses, added to which the turbulent state of the market must make those business models centred on investing tax-free lump sums far more fragile at present.

This is the time for all IFA firms to start the transition to a low-margin and fee-based market. The defined-payment specification from CP121 may alter but, whatever happens, the focus on payments for advice allied to service actually received will not go away.

The genie is well and truly out of the bottle and anyone who believes otherwise should sell their firm with all haste.

If we are to grow the IFA market share even further, then our proposition must be much clearer and its benefits obvious to the even the most casual enquirer. Inevitably, this means that we must focus on investment advice and, at a time when lower real returns are here to stay, we must inject realism into all who seek our counsel.

I fully appreciate that the driver for high-income products comes from the public and the FSA must support us in publicising the fact that double-digit returns carry a level of risk that most investors would never knowingly accept.

If we are to be in the right place at the right time (unlike me in the football sense), then we need the support of the press and the FSA, otherwise our sound advice will not be heard or, worse still, be heard and promptly ignored.

So despite my earlier vow, why did I find myself in an Irish pub at 2.30am (I was in the US at the time) watching England versus Brazil? For the sake of personal safety,I applauded Michael Owen&#39s goal but stayed static as Sol Campbell froze for the equaliser and silent as David Seaman watched in horror as the ball went over his head.

Mission accomplished – or so I thought, until my England-supporting colleague pointed out that I was the only person in the pub with a smile on my face at the end of the match. On that note, I made my excuses and left. Perhaps some of those product providers would have been better making their excuses rather than making those investments.


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