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Garry Heath: Advisers don’t realise how close they are to extinction


Everyone loves a panda, the prime symbol of endangered animals. Charities spend every waking hour fundraising and providing donors with cuddly toys. A baby panda is an international news story.

All this effort and I cannot help but ask: does the panda understand it is an endangered species? And, more importantly, does it care?

I doubt IFAs understand how endangered they are. Last week I asked our members to send in their regulatory invoices. We took the results and created the average firm: its costs had increased from £4,194 to £22,600 since 2010.

At this rate, by 2020, it will face a bill of £87,000. Quite simply, that is unsustainable.

Advisers are regulated by a body that avoids fining HBOS directors but will pursue an adviser into retirement and beyond. A body that is completely unaccountable to the politicians that created it or to the consumers it claims to serve.

Advisers have watched the RDR remove £3bn from the value of their businesses and a number of them will not survive the loss of trail commission. Advisers will never prosper under the FCA.

Two weeks ago, we launched a fighting fund with the aim of raising £50,000 to pay for a campaign to turn our Professional Advisers Regulator dream into a reality. We believe a separate regulator designed specifically for advisers would do a better job for clients than the FCA, and at a lower cost.

If we get the right support we can do the job. If not, perhaps advisers are an endangered species that is not worth saving.

Garry Heath is director general of Libertatem



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There are 28 comments at the moment, we would love to hear your opinion too.

  1. Since 2004 our regulatory costs have gone down…… We need to be a little careful how we use statistics and arbitrary periods.

  2. Like Garry I have been around in FS since before the onset of regulation in 1988. The number registered at the start was 350,000 with LAUTRO and 50,000 FIMBRA members.There were others registered with IMRO and the professional bodies. Fast forward 27 years and the total now number around 21,000.Clearly these are the most battle hardened as well as proving their ability to adapt. Yet the demographics are atrocious with the average adviser age reported to be 58. So if FOS or the regulator don’t get you Old Father Time will!

  3. Well said Gary. Perhaps you should start a petition, 100,000 signatures and we can get Govt to debate it? Meanwhile, Some Jolly Partners do exactly what they want with no interruption from the Friendly Compliance Army.

  4. “At this rate, by 2020, it will face a bill of £87,000. Quite simply, that is”… bad maths.

    a) Heath assumes that FCA fees are growing exponentially. He gives no reasoning for this assumption. If the growth is arithmetic, the 2020 bill could be £41,006. Still too much, but my point is that you cannot determine the nature of a sequence from only two numbers. What are the next three numbers in this sequence: 1, 2? Could be 3, 4, 5, could be 4, 8, 16, could be 3, 5, 8, could be literally anything.

    b) Did Libertttthingy take samples from the same firms in 2010 and in 2015? How much of the increase can be attributed to the fact that most of them will have grown in size?

    I am not trying to argue that regulatory costs have not ballooned, they have. I just don’t like dodgy statistics or alarmism.

    Anyway, that is just one small pedantic point on an article which is bordering on an insult to our business skills in its implication that we will all go bankrupt without Garry Heath. “Advisers will never prosper under the FCA.” Speak for yourself. “If not, perhaps advisers are an endangered species that is not worth saving.” This is downright childish. It’s the rant of a street preacher. Lord, these people aren’t listening to me, they deserve to be smote with fire and brimstone.

    50 thousand quid, Christ. To influence a body that spends £8m on a giant Furby to tell businesses to get on with auto-enrolment. Even Don Quixote had a lance.

  5. But Garry ~ How much will this new, small intermediary-only regulator cost to set up? Who will staff it? Will it have an entirely new rule book? If so, who will write that rule book? How independent from the FCA will it be? Will it cost those it will regulate any less than what we’re required to pay currently? And, not least, who will police it?

    If your plan is to command any credibility (essential if people are to be convinced it’s worth funding), you MUST answer these questions.

  6. Personally I think it is sensible to see what the FMAR discovers. It may be that all our wishes are met. I think the treasury have their teeth into this somewhat and they may be our saviours. Otherwise I will think of something else to do.

  7. I am truly thankful that alarmist preaching by Garry Heath hasn’t increased at the same rate as the quoted regulatory costs. RDR has added, massively, to the value of my business, so where he gets his £3bn value destruction figure from is a mystery to me. I’m reminded of that great film, A Shot in the Dark, when Inspector Dreyfus says to Clouseau “What you’ve said…… qualifies you as the greatest prophet since Custer said he was going to surround all those Indians!”

    • As @Duncan Jones said, survivorship bias is key. The profitable, sustainable businesses of today are not the same shape or size of those of 2001. I think the music industry is instructive. Historic players are fewer in number but theres a long tail of much more innovative niche business models.

  8. It is only at the point of extinction that any real action is taken to save any endangered species . By 2025 many Financial Advisers working today will have retired, leaving the current advice gap looking like a stream and not the Grand Canyon.

    The numbers coming though to replace these retiring advisers are very limited, not enough and will not have the experience gained over decades of advising. They will have greater qualifications then many before them, but will not have the capital or resources needed. Robo Advice has very limited potential, as it cannot understand consumers illogical behavior, the outcomes will be poor and as execution only transactions the consumer is likely to come off the worst. This will lead eventually to very limited offerings.

    Once the long serving advisers have left and all the experience has left with them, how does the regulator believe this knowledge will be replaced, by exams? I can read a manual, take a test, but actually defusing a bomb with the clock ticking in my ear is quite a different matter.

    All increases in regulatory costs are/have to be passed on to the clients.

    So, who really has the problem?

    I will await the outcome of the FMAR as I think the penny has eventually dropped, if it has not the outcome is clear for all to see. The regulators are potentially looking also at their own extinction if they get this wrong the outcome does not look favorable.

  9. Steve Laird ~ I don’t know for certain, but perhaps the £3Bn figure that GH cites is what regulation has cost the industry thus far whilst at the same time having manifestly failed on so many fronts, not to mention having created the advice gap on which the Treasury is now focussing by way of its Review of Over-regulation. The latter is primarily due to the FCA’s unyielding obsession with creating an unachievable world ~ the pot of gold at the end of the rainbow ~ in every conceivable respect, in which every potential outcome is utterly perfect. It just can’t be done and even Tracey McDermott has admitted that the relentless perpetuation of ever more rules and regulations is not sustainable.

    Soren Lorenson ~ To hope that all our wishes will be met is optimistic in the extreme. The challenge of the FAMR is a bit like trying to turn round the biggest oil tanker ever built. An almost inconceivably massive change of regulatory mind set will be required, not least in terms of forcing it [the FCA] to accept that whilst allowing the industry just to get on with things as best it may won’t be perfect, provided the framework for protecting consumers from the actual rather than potential consequences of bad advice remains in place, it will be a great deal better than what we have now.

  10. Hi Garry,
    Well the cause is lost unless regulation provide the same authority to IFA’s as the Accounting and Legal Professions. Who self regulated. i.e. a level playing field.

    There is an economic case, as the Regulator could be slimmed and cost reduced, Unlikely ofcourse who ever envisaged a slim gravy train.

    Complaints are to the professional bodies and while the Legal Ombudsman has no authority to prosecute, claims are settled around average £300.

    Ifa’s are regulatory targets, the others are not as they are represented by strong professional bodies.
    Regards, best wishes to you and family for Christmas and New Year.

  11. When I saw this article I didn’t want to wade in. However, I now see that my cynicism with this scare mongering is by no means unique.

    Regrettably, I am no longer a regulated individual, having sold my business back in February. The sale was simply because of age. I’m now 70 and as a sole trader had no succession plan. If someone could give me back only 10 years, I would never have bowed out. RDR was a boon, not a detriment. Harking back to the old days is just nonsense. Today we are better qualified, more professional and all round better and more competent advisers that the great bunch of hare brained numpties that existed before regulation. Why, even the milkman could (and did) flog you a worthless policy.

    Of course Gary wants to frighten the horses. Evidently his cry for funds is falling mainly on deaf ears. He may think he is the Don Quixote to our Sancho Panza’s, but we have heard the rumours of our demise too often in the past to take much notice.

  12. Christopher Petrie 15th December 2015 at 9:30 am

    Like others have said, this article uses nonsense figures reminiscent of those used by dodgy financial salesmen of the 1980’s!

    Many IFA firms are doing fine, FSCS notwithstanding.

    RDR was years ago…the survivors moved on long ago.

  13. Happy Christmas, Garry!!

  14. How many “end of the world” action groups has GH been involved in ?

    RDR has been a huge opportunity for those that embrace it, stream line their business and client proposition and added value services. Yes, the FCA are somewhat out of control, I doubt a small action group (given their shelf life tends to be a few years) will make any difference whatsoever.

    Certainly worth a try, but the doomsday scenario is over egged to drum up support

  15. Just like the so called ‘heath report’ the figures used use ridiculous assumptions which are then twisted to fit some doomsday agenda designed to frighten the masses and garner support.

    Even the title of this piece is ridiculous – Maybe change it to ‘Old School advisers are facing extinction’

  16. We should not forget that while the costs for IFA’s have increased, the regulator continues to exempt online advice providers and so-called journalistic providers.

    If we talking about compensating consumers for incorrect information or advice, then surely online advice providers should also have to pay into the FSCS levy.

    There are numerous examples of where online providers have provided detailed information on either pensions or savings accounts without any authorisation.

    I believe it is about time that the FCA revisited authorisation rules in connection with journalists particularly those running commercial entities that give online financial advice. The term journalist is being grossly misused by some entities that are clearly operating commercial entities without the correct authorisation and regulation. After all, if it is the responsibility of every IFA practice to check and make sure that all of the information on our websites adhere to FCA rules -wise not the same true of journalistic entities particularly when they derive income from pay for clicks or sponsored articles.

    If this was enforced, it would lower the overall costs and burden to all financial organisations and increase consumer protection. We should not forget that the FCA’s statutory objective is to protect consumers.

  17. I thought that profits across the advice industry were up and have never looked healthier?

  18. Good advisers offering great service and working within high quality, well run and well capitalised firms should prosper whatever the regulator throws at them. POOR advisers are an endagered species not worth saving. Thankfully we have a great reservoir of good ones and we should celebrate that rather than wasting time on this exercise in futility.

  19. When Elvis Presley died in 1977, there were an estimated 170 impersonators. By the year 2000 the number had grown to 85,000. Carry this forward and by 2043 there will be 9.5 billion Elvis impersonators, which is more then the predicted population of the earth, so presumably includes an alien or two.

  20. Have to warn you bulls, a severe 3-4 year bear market has just started, have you noticed?
    I’m going to wait a couple of years and then launch the most professional investment compensation claims service, as none of you are a match for the FOS.
    Insurers will vanish within a couple of years, but many of you won’t last that long, the FOS will ruin you all, with a bit of help from yours truly.
    The system will eat itself eventually, but there will be rich pickings for maggots.

  21. You can have great fun with linear extrapolation, for example, based on the recent request for additional funding by Libertatem by 2030, the fighting fund target will have risen to £18,000,000 – Ironically making it one of the largest costs to IFA’s.

  22. @GM fantastic as you are able to predict the next 3-4 years in the investment market I have no doubt you will be in great demand. However you could become the very first customer for your investment comepnsation claims service.

    As I say to all clients if someone claims to be able to time investment markets run a mile from them

    • Well Nick, do you also tell them the Ftse was at 7,000 in 2000, 6,800 in 2007, and…6100 now. Timing is easy, just requires more honesty than most advisers are able to provide, and more work. See you at 3,000.

  23. Well I for one, will put my (albeit annonymouse) head above the trench and say I agree with Garry !

    Not only for the reasons he has said, but more importantly the lack of new entrants to the advice arena, let us ponder both edges of this very sharp sword.

    We are being squeezed for every penny (and more) both intended and unintended regulatory consequences, this will increase (maybe not by Garry’s estimations) and by some margin.

    Also who in their right mind want to take this up as a viable career ? if they do who will sponsor them (the 5+ years) to get established, on a personal level you will need a sizable sum of money behind you to subsidise yourself while in training and examinations, and if any-one wanted to start up on their own or start a company the sum of money that would be needed would be huge

    I makes me smile when people refer to old (dinosaurs) advisers, if they wont change will die, lay waste on the roadside and kicked into the ditch by the new blood or born again Christians walking past, “hurrah” I hear them shout, we are great, we do it the right way, condemn these old fools to rot, because they cant or wont change !!….. Perhaps China hasn’t got the monopoly on poor human rights or a sense of fair play.

    Do any of you believe for one moment the FCA don’t exaggerate to get their point across

    Maybe ignorance is bliss ? and we should blindly accept everything that is forced upon us ?

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