Most things are open to interpretation. Either there is a problem with the message or a problem with the audience, it is all a matter of which side you are on.
However, sometimes, a message is put across in such a way that there is very little scope for misunderstanding. Disagreement, yes, but misunderstanding? Most definitely not.
Sandler is a case in point. The content is very easy to read and highly transparent, leaving very little room for confusion. However, going by some of the reactions to it, perhaps I am wrong.
When the report came out on July 9, it was clear that a number individuals keen to air their views had not even read it. Or they, or a third party, had skimmed through it so quickly that they failed to pick up on some of the key issues, which is partly understandable.
After all, it is almost impossible to read a 218-page document in a couple of hours. However, an easily digestible 32-page summary covering all the salient points was also very kindly provided.
As I said, it is easy to ignore some of the initial views bec-ause they were said in haste. However, comments made a month or so after publication, when individuals have had the opportunity to pore over the minutiae and formulate a measured response, do need to be questioned.
A case in point is the response by the LIA and its interpretation of Sandler's proposals for IFA remuneration (Money Marketing, August 15).
I specifically refer to the reference to paragraph 10.63 of Sandler's report. It does indeed state that “advisers would receive no payment from pro-viders for advice”. But the paragraph should not be taken in isolation.
After all, it is only one of several hundred in a very large, detailed document. If one reads on, and not that far I may add, in fact to the next but one paragraph, the report goes on to outline the mechanics of what is proposed and states in chapter 10.66 that “the actual flows of income under the review's recommendations could in many cases be identical to those in the present regime”.
Put simply, what Sandler proposes is that the IFA and client agree the cost of advice at the outset, with the IFA being able to recoup the cost of this advice by way of a charge on the product.
What, may I ask, is the problem with that? In fact, it is very similar to the way we as a firm currently operate, the only difference being that we presently enhance product terms where commission is in excess of the fee for advice agreed at outset.
Under Sandler, as it stands, this would be lost as the report proposes that the provider offers the product to the adviser at a “wholesale price”, with the adviser then offering the product to the client at a “retail price”. The net effect would be similar to now but should also have the benefit of making charges more transparent across providers and create a level playing field among IFAs. So far so good.
There is even good news for those IFAs currently remunerated on a commission-only basis as the review also recognises the reluctance of most consumers to pay a fee and even supports the cross-subsidy regime.
See paragraph 10.63 (the one the LIA seems to have taken issue with) which states “…but given the general consumer reluctance to pay on this basis, it could also be contingent on a sale .clearly higher than the non-contingent rate to cover the risk that the consumer did not buy anything”. Not much change there either. So, I repeat, what is the problem?
The only reason I can see for anyone objecting to the proposals is that they are not comfortable disclosing the cost of their advice to their clients or they have something to hide. Perhaps it is a combination of the two?
If we want to be treated as professionals, we must behave in a professional manner and that means being up front about how much our advice costs. It does not mean hiding the cost away at the back of a quote and hoping the punter does not find out.
If that is the way you are operating, then perhaps it is fair to say that you should not be using the title independent financial adviser and Sandler does not think so, either.
Donna Bradshaw is communications director at Fiona Price & Partners