Anyone who thinks the Financial Advice Market Review was to address issues faced by advisers dealing with their current wealthy client base has not understood the project. The FAMR is about providing advice to those who, post-RDR, and arguably before, could not access or afford it.
While much industry reaction has been negative, viewed with its objectives in mind, the executive summary puts forward a positive framework for change. It offers the potential for vibrant new sectors of the financial advice community. The document is far from perfect, but given the timescale and the extent of change needed, is this surprising?
The detail contains too much old-style regulatory thinking and a lack of clarity on key points. That said, we should work with the Treasury and the FCA to help them recognise that to deliver the new environment they desire they are going to have to work differently, not just talk about it.
The biggest winners appear to be those designing automated advice services and employee benefits/corporate advice firms. Traditional advice firms with established customer bases should be well placed to deliver new services. This Government’s pension reforms are delivering a boom time to adviser firms. The FAMR lays foundations for them to invest in their future by building new low-cost services to expand their audience.
Perhaps I see things slightly differently, after spending most of the past three months building business cases for new profitable FAMR-type advice services, but the FAMR is broadly positive.
Industry response to the report may significantly impact on our relationship with the Government for many years. Like it or not, this is the most substantial attempt to stimulate the growth of advice, albeit not necessarily traditional advice, in 30 years. It is designed to reduce exclusion from the advice process and offers a huge opportunity for firms to grow.
The Government does not want to hear the FAMR is wrong, it wants the industry to engage with it. By delivering on extending the reach of advice it will put us in the best position to lobby for change. Just as it is argued it is better to be in the EU trying to drive the direction of change than on the outside without a voice, so with the FAMR, those who participate will have the best chance of being heard.
Ian McKenna is director of the Finance & Technology Research Centre