Another depressing weekend for Leeds United, with a 0-0 draw with Charlton. What has caused the deterioration since the start of the year? Life goes on. It could be worse, I could support Leicester City. However, to less interesting but easier things such as CP121.
There is no value in the term independent. Now, I bet that has got your attention and no doubt the attention of my network management colleagues as well.
But, please, before you email me with your “angry from angryplace” comments (Andrew.Bedford@mifas.co.uk), please read the whole of the article then let me know what you think.
I visited my parents in Leeds this weekend and tried to explain to my father the changes our industry is potentially undertaking. As an educated member of the public, he summed it up very well after about an hour better than I could.
“Andrew, do you remember when all the family were tog-ether at Christmas and we played charades?” I wanted to say not really and I only rem-embered the boredom, Uncle Fred getting paralytic and the presents I got but thought better of it. Mainly because he was baby-sitting the three kids that night and also bec-ause he no doubt thought he was going to make a pertinent point. In hindsight, I am glad I listened. “Yes, dad, great times. Why do you ask?”
“Well”, he said, “let me see if you can guess who I am. I want to help clients gain their dream of financial independence and at the same time for me to earn a good living commensurate with my education, work rate and standing in the community. I have the FPC qualification.
I have to know my clients details fully before making any kind of recommendation to them. I have to recommend an appropriate product type, such as an Isa, from the whole spectrum developed by providers that will provide a solution to their objectives or needs. Finally, I then want to recommend, in my opinion from the research I do, the most appropriate product from a provider. Who am I?”
I said: “An independent financial adviser”, to which he quickly came back and said: “You cannot actually say who I am as there is one piece of information missing. That piece of information is a choice that clients will have and I will give you that final piece of information now.
“I can offer my clients a choice. That choice is to either pay for my advice in an agreed fee basis or to pay me through the commission from any sales generated from the advice given or indeed a mixture of the two methods.
“The choice is entirely that of the client and we agree this early on in the meeting. I am happy to work on the same basis as some solicitors nowadays which is 'no win, no fee'. In effect, if you do not like the work I do or the recommendations I make, you can walk away and pay me nothing?”
“What is the alternative?” I asked, to which he said: “You can pay be a fee only and have any commission rebated against that fee”. This is where my younger daughter Steph-anie, aged 14, piped in with: “Why would someone want to go down the second offering, as the first gives the same benefits to people with a choice for how they should pay?”
My dad was describing an authorised financial adviser working in a network as a distributor firm with the whole market of products to choose from.
The second offering is an independent adviser as proposed in CP121.
At a time when we have a big savings gap to close, that is why I think there is no value in the term independent.
All the reasons for remaining in a network (compliance support, marketing help, training & development, res-earch, etc.) of course still apply. An authorised financial adviser offers more choice to the client. Confused? That is why our CP121 team will continue to work on behalf of all advisers during this consultation period.
Andrew Bedford is director of marketing at Misys IFA Services