View more on these topics

Industry surrendered the initiative over RDR

Johnson: ‘IFA community eventually will not offer any advice at all’
Johnson: ‘IFA community eventually will not offer any advice at all’

One of the biggest talking point of the recent Money Marketing Retirement Summit in Dublin came from the explosive comments of Centre for Policy Studies research fellow Michael Johnson.

In a speech on the future of the pension industry, Johnson shocked delegates by attacking the industry’s past attempts to represent itself as “appalling” and warned that continued “wallowing in self-interest” will spell the demise of the sector. He said the sector had “surrendered the initiative” on the RDR to the FSA.

He said: “I think the IFA community may well find itself moving away from advice and first and foremost become distributors. Eventually, they will not offer any advice at all.”

Worldwide Financial Planners adviser Nick McBreen says: “I think he was on the money. As the RDR debate has dragged on, it has become more and more clear that people are preparing for the RDR by protecting their particular vested interests.

“We have been appalling as an industry in terms of actually making the right representations in the right way as an organisation and we are now being told what is going to happen. We have reached a point where what is going to happen has been done to us by default because we have been too busy arguing.

“We should be making a concerted effort in how to negotiate rather than battle.”

Syndaxi Chartered Financial Planners managing director Rob Reid says: “I think there is no unity because you do not have a homogenous group. You cannot bundle all IFAs together. Look at the problems had by IFA Promotion, many of the higher quality IFAs have gone away from it because, to some extent, they do not want to be seen in the same bucket as the other guys.

“The only thing you can bring all advisers together around is the notion that advice is good value.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Robert, I did call to discuss your comment in this piece but you are unavailable. I read your reference to IFA Promotion and must say I am puzzled by it.

    Far from many higher quality IFAs leaving IFAP, the level of professionalism amongst IFAs listed on our database has been rising well ahead of the RDR curve. Part of the reason for this is that for the last 8 years we have been publishing the incremental qualifications held by these IFAs, explaining their value to the 500,000 consumers a year who use our service to find local IFAs, and making it simple for people to find relevantly qualified IFAs in their area.

    There are a number of other ways IFAP has increased its attractiveness to professional IFAs. For instance, last year we launched our ‘Professional Connections’ business to business referral service between IFAs, mortgage advisers and solicitors. Already over 1,000 advisers are using this service to broaden and strengthen their local professional network.

    IFAP also runs the hugely influential media services database, which you can belong to if you want to become a spokesperson for your firm and your industry by providing expert media comment. Surely these ‘media IFAs’ would meet your criteria of quality?

    I don’t disagree with your remark that IFAs are not a homogenous group. In the current regime, there are of course differences between the firms listed with us who all come under the IFA definition. And as we move towards RDR, the type of adviser we will be listing will become more homogenous with regard to payment and qualification. However in some ways this will make it easier for us to promote the overall IFA brand whilst at the same time, as you say, explaining the generic ‘value of advice’.

  2. So many opinions and all of them are “on the money”…

    Do we now say goodbye to the “I” in AIFA and IFAP?

  3. My original comments were truncated I dont see IFAP having a problem they have a collosal opportunity providing we send the best message to consumers that advice is worth buying at many levels

  4. Johnson is quoted as having said “I think the IFA community may well find itself moving away from advice and first and foremost become distributors. Eventually, they will not offer any advice at all.”

    Yet other, arguably more knowledgeable commentators have suggested exactly the opposite, namely that IFA’s will offer purely advice and that the customer will then be left to purchase elsewhere whatever product may have been recommended. So, not much consensus there. Personally I consider both opinions to be a mile wide of the mark.

    I just don’t see any IFA firm setting out its stall on the basis that it only brokers products with no guidance as to suitability or, alternatively, that all it offers is advice but not implementation. That seems to be tearing the entire IFA proposition into two completely separate halves. What clients want is someone who can advise them on what type of product and which product in particular is most suitable to meet their objectives and for the complete service to be bound into a single package, followed by ongoing service with regular reviews.

    Does Michael Johnson have any direct experience whatsoever of what IFA’s do and how they do it or is he, as appears to be the case, just some academic armchair theorist spouting off controversial ideas just to get himself noticed?

    As for Johnson’s claim that the IFA sector has “surrendered the initiative” on the RDR to the FSA, perhaps he should try negotiating with the FSA from the perspective of the IFA community. Has he, for example, tried to obtain answers from the FSA as to why it remains hell bent on steamrollering it [the RDR] through, despite widespread objections from many quarters, not least on the issue of the rigged Cost:Benefit Analysis on which it’s been launched? And what about all the consultation feedback that the FSA refuses to publish, despite proclaiming itself to be “an open and transparent regulator”, which patently it isn’t? Without giving any details, the FSA blandly says it has “taken on board” the comments it has received, but its determination to keep those comments secret suggests that in reality it hasn’t taken on board anything at all ~ surprise, surprise. (If the FSA is concerned about confidentiality, it only has to offer respondents the choice).

    The FSA’s consultation programmes are widely considered to be nothing more than exercises in cynical tokenism.

    Who pays your salary Mr Johnson? It looks to me as though the Centre for Policy Studies is just another government quango that we could well do without, so why don’t you go and look for a real job instead of making such obviously ill-informed pronouncements such as these?

Leave a comment