View more on these topics

Independent View

Continuous reruns of the polarisation debate hardly help toanish the public&#39s mistrust of the financial services industry, especially as there is no need to change the present system.


It appears unfashionable to describe yourself as selling life insurance. After nearly 40 years in the business, I am proud to have seen the pro-ceeds of life insurance policies I arranged guaranteeing fin-ancial futures of families and businesses.


Of course, we provide wider advice. Over the years, I have seen the development of unit-linking, the growth of direct salesforces, changes in commission structures, the abolition of life assurance premium relief, the establishment of networks, financial services regulation, the influence of Europe, an informative financial press and never-ending changes in IT.


There has also been the introduction of polarisation, disclosure and compulsory T&C standards.


I have friends who will also point to the introduction of biros, calculators (who else remembers their forerunner, the Brunsviga?) and fax machines in my working lifetime. I did not start with a quill pen, honest.


We should remember that, having become financial advisers, all the clever advice in the world on savings, pensions and investments must be premised by catering for protection needs.


Only this week I learned of a new client raising young children from the proceeds of his wife&#39s life insurance. I see yet more with-profits endowments amply paying off mortgages (where are the ones that don&#39t, except in projections?).


Before anyone says: “Len would say that,” or “It&#39s only insurance, don&#39t get sentimental” or they remind me of the industry&#39s faults, let me speedily say that I have heard all the knocking before.


Giving advice on using the industry&#39s high-quality pro-tection policies to put money in the hands of those for whom it is intended, when it is needed most, gives job satis-faction, especially when claims occur.


Negative comment discouraging the purchase of financial products concerns me. The Daily Mail recently reported the household savings ratio had dropped to 3.8 per cent, its lowest level for many, many years. Various Government policies and mistrust of the industry were cited among the causes. Mistrust of the industry is hardly assisted by yet another polarisation debate. It seems to have more comebacks than Frank Sinatra.


I cannot see any reason to change from the current system. It seems to me the success of the IFA distribution system (quality and quantity) and the greater public awareness that it is IFAs who “spot the differences” is motivating others to create a third distribution system.


“You thought you had an IFA…but we don&#39t want to give you that,” as that great intellectual Chris Tarrant might say.


Debating polarisation should not be about practitioners, nor about the industry providing more choice and competition. For me, it is about consumer confidence. Confidence is rooted in competence, clarity of status and disclosure.


A multi-tie would give an aura of “independence” through selection from six “best” companies. However, do you imagine companies will tie firms to easily cancellable arrangements?


The $64,000 question is who takes responsibility in a multi-tie for the conduct of business, for example, fact-finding, unconnected with selectionof products or providers?


Anyone who does not think there would be a commission war within hours of the approval of multi-ties is living in cloud cuckoo land.


The industry often shoots itself in the foot. Before polarisation, some “independents” mainlined on a few companies&#39 products. Some company representatives held agencies with several companies. Spot the difference. We are beyond that. Don&#39t let us go back.


White labelling? “My Broker is with CGNU.” “Mine is with Allied Dunbar” “And mine&#39s with Friends Provident, I think.”


The responsibility and liability of an IFA is great. Setting up an IFA business with all at risk and an insatiable costly demand for servicing existing business, coupled with the impossible task of balancing your time in all aspects, is an awesome responsibility.


From a commercial viewpoint, rather than acknowledging job satisfaction, many practitioners would feel quite comfortable, given the choice, to turn to multi-tie status. But is this in the public&#39s interests?


The benefits to the consumer of real differences in the type of advice are hardly advanced by attempts to narrow those differences from the bottom up.


It would lead to a type of advice which would widen choice but would not reflect the independence which is now increasingly valued.



Len Warwick is managing director of Warwick Butchart Associates


Debating polar-isation is not about practition-ers – it is about consumer con-fidence. Confid-ence is rooted in competence

Recommended

L&G offers stakeholder packs to aid advisers

Legal & General has created two stakeholder inform-ation packs to help financial advisers in discussions with employers.The packs are the first stage of a major L&G marketing drive in the run-up to the launch of stakeholder in April 2001.L&G says it is responding to IFA demand for material which keeps them up to date with […]

All aboard for stakeholder advice

Britannic Assurance is travelling round the country in a double-decker bus to bring the stakeholder message to employers.Its roadshows follow a survey conducted for the life office which revealed that many employers are unaware of their obligations under the stakeholder pension regime.It also found IFAs are the top choice for employers who have already sought […]

Concern at admin chaos over flood of transfers

The ABI is negotiating with the Inland Revenue to halt the predicted flood of transfers to stakehol-der from pension top-up plans after the Government&#39s acceptance of par-tial concurrency.The ABI is worried this scenario will create an admin nightmare for life offices.It fears the tax-free cash benefit available from a stakeholder held concurrently with an occupational […]

Govt urged to curb stakeholder ignorance

Pressure is mounting on the Government to spend more cash on stakeholder education following the revelation that many small businesses remain ignorant of their new obligations.The quarterly Finance Line survey from marketing information specialist Taylor Nelson Sofres shows that more than two-thirds of businesses with turnover between £250,000 and £1m are unaware of their duty […]

Health - thumbnail

Fit for Work: guidance for employers published

On Friday, the Department for Work and Pensions published its guidance for employers on using the new Fit for Work (FfW) service to help ill employees return to the workplace. It also includes more details on the tax exemption for medical interventions that commenced on 1 January 2015.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com