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Independent view

Young people are leaving the industry, disillusioned by the constant barrage from the media and the FSA.

Almost seven years ago, I took on an
enthusiastic 20-year old who, having worked in a small traditional
IFA practice, wanted the opportunity to learn and grow in a more
dynamic environment with a resolute desire to be a quality IFA.
Having gone through a rigorous training programme and been coached in
innovative and cutting-edge techniques of financial planning, she is
now qualified to advise clients. The learning curve has been steep
and set to high standards but she has passed all the requirements and
received an excellent background as a qualified paraplanner.

But just when her dream is being realised, she has quit, not just my
firm but the entire financial services profession. She is completely
disillusioned by the prospects for the future in an increasingly
confused profession which is constantly under attack, not just from
external sources but also from our own regulator.

This is a disappointment for me and my firm but the bigger point I
want to make is what is happening to the young blood, if any,
entering our profession?At Anand Associates, we embrace change as an
opportunity but if trainee advisers in a motivated, progressive
environment still choose to quit, then who will join the profession
in the new, mystified world after polarisation?Depolarisation will
discourage new recruits as they will be as confused as the public in
trying to work out what is going on. It is bizarre that within one
practice you could be an IFA for some of your clients, a multi-tied
agent for some aspects of your business and tied for others. Only
civil servants could devise such a situation and call it
simplification – that is, people without any sense of commercial
reality of what an IFA does, how advisers behave or, more important,
what clients need.

Unscrupulous tied agents have tried to pass themselves off as being
IFAs. I recall getting a phone call from a rep of City Financial (a
Lincoln tied agent) stating that “they were the country’s largest
independent agency”. When asked if he was an IFA, he simply repeated
the statement.

In the new world, there is going to be far more of this. I do
question the motives of IFAs becoming multi-tied agents in that they
would compromise their business ethics. How can you sleep at night
knowing you were unable do the very best for your client because you
have one hand tied behind your back?Of course, there are commercial
realties to consider and one could argue that at least these people
may then be able to afford to stay in the profession and so provide
some advice. Is this really what the FSA intended as a way of
improving consumer choice?What are the opportunities arising from the
new world, and, specifically, what is the opportunity for us, having
lost a valued member of our team?Depolarisation of our profession
will cause polarisation elsewhere. The marketplace is about to be
polarised into those who can afford top-quality, creative financial
planning and those who cannot.

As IFAs, being forced to charge fees, in order to stay in business,
we will have to be ruthless who we talk to. There is no longer room
for the cross-subsidy of profitable clients allowing us to give
advice to non-profitable ones.

We must run our businesses even tighter, offering enhanced service to
justify fees, which is no bad thing.

For us, this is an opportunity to restructure our business. The
replacement for our leaver will not necessarily be a new adviser but
will be someone who wants to use their technical expertise as a
paraplanning office manager and who is as excited about the future
opportunities as we are. Someone who shares our business ethics in
delivering the very best financial advice, without restrictions.

As I mentioned earlier, I have genuine concerns as to how new people
are going to enter this profession and the FSA needs to address as
its next big issue otherwise we will have a brand new regime and
structure but with no one working in it.

Bhupinder Anand is managing director of Anand


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