A recent Money Marketing article told us “Older IFAs seek escape route from the industry”. It went on to say that most IFAs over 55 would retire now if they could. It said: “A survey of 100 IFAs found that 86 per cent of respondents would leave the industry tomorrow given the choice.”
The regulatory burden and the 1 per cent world were cited for such disillusionment. As a 57-year-old IFA I should have an opinion on the subject and, of course, I am not remotely surprised.
It is true the documentation required to comply with regulation and ensure we are bullet proof is time consuming, but so what? None of us, I hope, argues that regulation is unnecessary. Twelve years ago there were companies employing part-time agents. Some advisers conducted fact finds on the back of envelopes. There were patchy standards of training and no regulator insisting on conduct of business, disclosure of charges and commissions etc.
Many of us consider other professions have greater respect for us now. Our clients are experiencing the “added value” of disclosure, reason why letters, terms of business and a “no surprises” approach to product information.
Practitioners are better and continuously trained and more closely supervised. It is not regulation, as such, we should be depressed about. The issue is too many changes, too often – adjusting to which reduces time with clients. On that, I share concern.
Change is a challenge for those with more years behind them than ahead! I still consider a temperature of 30 degrees is not hot – 80 degrees is.
Woody Allen once said: “Youth is wasted on the young.” The speed of regulatory and IT change is frightening for some.
My own advancing years may not permit me to adapt easily to change – although I have – but youth does not have my experience of dealing with numerous people and situations. The average age of an IFA is 54. We wonder where future advisers will come from. Depressed Grifas (grey retiring IFAs) can boost their morale by passing their experience on.
Of course I get depressed. It seems no sooner is there a set of rules than Fimbra becomes the PIA, which in turn becomes the FSA. Changes to rules and guidance occur more rapidly than is desirable. There are absurdities like the ruling on photocopying Birth, Death and Marriage Certificates – plainly designed to slow up a claim, an open market option or a drawdown arrangement and definitely not in consumer interests.
We read politicians knocking advice and advisers (“no advice is needed for stakeholder”). Now that really riles me. I fully accept that we do not have to believe politicians, but we cannot ignore their influence.
Maybe consumers will work their way through decision trees between Who wants to be a Millionaire and News at Ten. Some will enroll without advice – their choice and their risk.
But I have not spent the past 39 years preparing to be a slot machine or distributor of decision trees. I am an independent financial adviser. People travel miles to seek my advice, ask questions and obtain reassurance. This is how I earn my living – I am not alone.
I am exceedingly disappointed that after playing a role in investor protection – including chairing the panel which designed and delivered minimum T&C standards for those giving financial advice – we should find a move towards polarisation between who can pay for financial advice and who cannot.
Certainly the 1 per cent world is for conveyor belt distribution of “execution only”/ category C transactions. Advice will progressively be paid for by fees. This will result in social exclusion – well done the politicians.
Many advisers offer the choice of fee or commission-based advice. If the latter is chosen but does not lead to a transaction or results in excessive servicing, the IFA cannot then charge. It makes more sense to charge fees paid by cheque or partly or wholly through commissions. We want paying for all we do, what we know and the responsibility we take.
Gosh. Getting paid as an adviser rather than as an arranger of transactions. Now that gets interesting after all these years of giving so much time free of charge. Maybe things are not so bad after all.
Len Warwick is managing director of Warwick Butchart Associates