View more on these topics

Independent view

November marked something of an ending for me. With the FSA assuming its full powers at the end of last month, my job as PIA board director to all intents and purposes has finished. So it is time to indulge in nostalgia and reminiscences.

It is over 20 years since I first became an IFA. The term was not invented then. Many people who purported to be independent were largely multi-tied. But there is no way that at that stage the types of changes and increases in professionalism that have taken place in the independent sector could have been envisaged.

It was very much a sales culture and the principal product was 10-year – or sometimes longer – savings plans. Capital units were normal. Single-premium costing was an alien term. Pensions were rarely discussed. Investments were so simplistically sold that I blush to remember the presentations.

We now have degrees where graduates can study to be independent financial advisers. Exams are a regular fact of life and we have continuous professional development. This really has had a marked effect on the quality of independent financial advice.

The knock-on effect is that the cost of an adviser has increased over the last 10 years by 40 per cent – and in the last five by 22 per cent – according to the Oliver Wyman report.

More particularly, it is the training and supervision costs that have increased much more than the advisers&#39 salaries. We all know that we expect greater quantities and quality of business from the advisers that we recruit these days than was ever possible 20 years ago.

But what for many had its origins in a little savings plan, has grown to be very significant in terms of the big picture. No government is going to let us alone and we will always face continual changes. This is because we deal with such an important area of people&#39s lives.

The Government has an incentive to make our sector work in order to ensure that people become self-sufficient and save enough for their future so they do not have to fall back on the state.

Of course, there was no regulation in those days. Anyone could be a window cleaner one day and set up as a financial adviser the next but the regulators have ensured that this is no longer possible. The results are better quality of advice to the public – but at an increased cost to them.

Now our challenge is how to get independent advice to all strata of socioeconomic groups. The top end will be well catered for by IFAs but the lower-income brackets – and increasingly some middle-income bracket investors – may no longer be economically viable for many IFAs to look after.

Everyone needs to be involved with this debate as it is essential to the growth of our businesses that we address these areas as well. Traditionally, advisers upgraded their client banks over time but to expect newer advisers to jump straight into the top end of the market is demanding a lot of them.

Much has happened in the past 20 years and the pace of change is only quickening. Providers are now choosing who their partners will be.

They will be quite choosy about whom they want on board and who will be looked after on a more than a callcentre basis.

It will be interesting to see how this works out and whether providers are savvy enough to suss out the rising stars – as well as those they think have already arrived.

A lot has been achieved in recent years. The industry is a more sober, if less colourful, place than it was when I first joined it.

Amanda Davidson is a director at Holden Meehan

Recommended

Darling faces critics at ABI seminar

Secretary of State for the Department for Work and Pensions Alistair Darling faced criticism from senior industry figures at an ABI seminar in London last week over his plans for pension credits.Speaking ahead of a Parliamentary announcement that day, Darling said the Bill bringing in the pension income top-ups was likely to be passed in […]

Autif&#39s McMeehan slams &#39short-termist&#39 pension fund strategies

Pension trustees and fund managers are becoming “short-sighted, short-termist and lacking in vision” and will continue to move towards less volatile investments, according to Autif director of communications Anne McMeehan.The increasing frequency of reviews of investment strategy of pension funds means individual managers will want to be sure of some positive returns over shorter periods […]

Action needed to boost stakeholder take-up, ABI pensions head tells Sofa conference

ABI head of pensions Joanne Seagers claimed 80 per cent of employers who must designate stakeholder schemes had already done so, but she admitted work needs to be done to get employees to sign up.Speaking at this week&#39s Society of Financial Advisers conference in Birmingham Seagers said the ABI estimates 300,000 to 350,000 firms must […]

Fifth bond from Chelsea

Chelsea Building Society has unveiled the fifth issue of the Chelsea portfolio extra fixed rate bond at the same time as its fourth issue.This combination of a high interest account from Chelsea and a unit-linked bond from Norwich Union differs from the fourth issue in that it allows up to half of investors&#39 capital to […]

The Great British Break-Off

Despite predictions that a vote to leave the European Union would result in an economic apocalypse, UK equities have shown the market equivalent of a stiff upper lip: bouncing back, keeping calm, and carrying on. Although the road towards Brexit remains clouded in uncertainty, UK equities offer a range of opportunities to investors seeking returns […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment