As the old proverb says: “May you live in interesting times.” It seems particularly appropriate for the IFA sector at the moment as, yet again, we are arriving at another crossroads where fundamental decisions need to be taken as to future business strategy.
The recent success of H'Angus the Monkey in Hartlepool is both amusing and tragic and demonstrates how a supposed democratic process can fall into disrepute.
Fortunately, democracy can still be seen to work and the response to CP121 is bringing about a cause for rethinking at least in the area of the ill-conceived defined-payment system.
A close eye will have to be kept on the revised proposals and second time around, perhaps the benefit of viewing the situation from the consumers' point of view in terms of cost/benefit and the imposition of VAT will be somewhat more in focus.
What is clear is that polarisation as we know it is to disappear and this is a victory for the insurance companies and bancassurers – albeit at a time when the market has already adapted to broadening the product base for investors.
There is nothing wrong with polarisation had it been effectively policed from the outset rather than the adoption of straddling that grey line between long-term client interest and short-term corporate profitability.
As one era is consigned to the history books, it is necessary to look forward to the future and plan ahead. Undoubtedly, the next six months will see a frenzy of activity in terms of not only revised business profiles but, more particularly, the choice of organisations with which one wants a business relationship.
With an amendment to the defined-payment system, there will be less migration to multi-tie or authorised status but the shape of the marketplace will look very different in the future.
The traditional providers have been going though a consolidation process which is going to continue to escalate post-polarisation and the fund management groups which are finding the going tough in this period of bear market conditions fail to recognise the damage being caused to their IFA relationships with fund managers playing musical chairs. Maybe there is a chink of light with the recent Revenue decision on the Rathbone fund, for example, but it is not a precedent upon which I would like to rely at this stage. Perhaps with regulatory changes to product structure, there will be a creation of a greater number of niche products and it is perhaps the boutique operations from both here and abroad that will be successful in the new environment.
Of course, there will be advisers who want to form relationships with providers and find that the providers do not want their business and we are in a period when everything is up for grabs.
This is a people business and it is about working relationships both with providers and clients to make the whole process work. Consolidation has brought about the growth of the dreaded call centre which, of course, brings about the complete opposite of what should be the end goal of a cost-effective and reliable service.
It is worth dwelling on these issues when looking to organisations which you want to support on an ongoing basis. Two examples highlight my point, the first being trying to obtain information on the current management charges to an executive pension plan.
The first call at some time before 5pm went through the press button and music process and, after being held in the queue, the plug was pulled as it was 4.55pm and obviously home time.
A second call using another number produced a live person at the end of the phone who advised me that as the contract was no longer receiving ongoing premiums there were no annual management charges being applied. If this is the case, it perhaps explains why the performance has been so poor but I suspect there is an answer to be had out there.
The second case involves clients with substantial money in an international life office's fund which has consistently failed to provide the promised updates and then quite by chance I see in the trade press that the fund is being closed. These examples show me how much a working relationship is valued. It is indeed going to be interesting times.
Nicholas Conyers is a director at Pearson Jones