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Nic Cicutti: What do advisers really need from a trade body?

Nic Cicutti

Two weeks ago, shortly before taking a quick winter break in sunnier climes, I wrote a column in which I pointed out some fairly uncomfortable truths about Garry Heath’s latest trade body, Libertatem.

As we caught our flight I promised myself not to check any work messages for the duration of our holiday. I returned home last Saturday to find an explosion of emails in my inbox, all referring to my argument that Libertatem is, effectively, a dead trade body walking.

Money Marketing’s own website carried almost 40 further comments, including one from Garry himself, claiming my views represented nothing more than an attempt to avenge myself for being sacked as a guest columnist in the IFA Association bi-monthly magazine he published more than 20 years ago.

While noting in passing that nowhere in his lengthy reply did Garry actually attempt to respond to any of the financial points made in my original comment, which is not unusual for him, he also totally misunderstood my motivation in writing about Libertatem.

Let me assure Garry my reference to the issue a year or so ago was more about coming up with an amusing intro to my column while simultaneously declaring an interest, rather than decrying what happened to me back then.

No, the real reason for discussing Libertatem is different: it is an attempt to begin a reflection on the kind of trade body advisers really need if they are to face up to the challenges of the next 20 years.

This is borne out by the private responses to the same column in my email inbox. Out of 30-plus emails on the subject, 10 either attacked me personally or my viewpoint, often both. 12 supported key elements of my argument and the remainder discussed various aspects of what I said without coming out firmly in favour or against.

Most significantly, whether supportive or not, more than two-thirds of all the emails wanted to discuss what kind of trade association advisers should be aiming to create.

Let me start with Libertatem, whose strategy seems based on the central promise that with the election of a new Government last May, one unencumbered by the need for coalitions, it is possible to achieve a more industry-friendly outlook from the Treasury in respect to regulatory matters.

This is a mistaken approach. Yes, the Conservative Government will remain in office for another four years and, quite likely, longer than that. But that does not mean George Osborne would be willing to entertain the kind of changes Libertatem wants to see happen, especially a separate regulator for advisers.

In terms of lighter-touch regulation, what is interesting about Osborne is the Chancellor and his Treasury minions are infinitely keener to see an end to the badmouthing of banks than they are to do the same with advisers.

Which is precisely why support for the current Financial Advice Market Review by some of those hanging around Libertatem is so naïve: the FAMR is not there to assist advisers but to help tilt the playing field in favour of banks and large insurance company salesforces.

Finally, what Garry ignores is the potential for new and unforgiving political forces taking office five, maybe 10 years from now who will not stand for any attempt to soften regulation on the industry.

The naming and shaming of insurance companies over the pensions misselling scandal in 1997 and the imposition of tougher regulation on the industry was in part Labour’s revenge after spending almost 18 years in opposition, its views systematically ignored by the Conservatives.

Advisers desperately need a strong trade body to represent them, one that can plan a decade ahead, not try to take them back to the 1990s. Ironically, the most farsighted advisers are reviewing and altering their practices to reflect changes in technology as well as the mounting impact of the RDR on their overall business strategy.

Now would be the time to start forging alliances with consumer groups to push for greater transparency and lower charges in financial products, to promote even higher levels of qualifications necessary for all advisers, whether employed by banks or genuinely independent, before they are allowed to interact with prospective clients.

A trade body that emphasises the need for enhancing advisers’ professional status, which promotes and actively encourages the use of technology as a potential, if partial, solution to financial exclusion – the so-called advice gap – stands a better chance of being listened to outside its own narrow ranks.

None of the disparate organisations operating in today’s market fully reflect those priorities, which is why they are doomed to achieve little, if anything, on behalf of their members.

The only way forward is if some of the more farsighted trade bodies set aside their own narrow ambitions and agree to help create a unified body for all advisers.

Heath himself understood this back in the early 1990s, with Nfifa, the body he headed back then, agreeing to merge with Cifa to create a larger trade body for IFAs. Not long after that, Nfifa merged with the IFA arm of Biiba to create the IFAA.

Rather than pretend that Libertatem – or Apfa for that matter – can achieve anything significant for advisers, now is the time to begin the process of creating an organisation that genuinely represents advisers’ interests.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk

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Comments

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

  1. As I read this I reflect on the 68 replies to the FAMR which has just been published….. No-one but a vocal minority really is interested in a body that represents IFAs. I should not worry about the emails you receive Nic, they probably do not represent us in any case!

  2. Neither Libertatem or APFA or any other body representing the interests of the FA community can expect any sort of success by trying to tackle (still less confront) the regulator head on. No imperative exists for the regulator to do anything more than make some sort of pretence at constructive engagement. APFA’s dogged attempts to win round the FSA/FCA to the adviser community’s point of view on its arbitrary and unilateral confiscation of any sort of longstop has yield absolutely NOTHING, not one inch of progress. One has to wonder on just what basis APFA believed that it was actually getting somewhere near to the regulator giving a millimetre of ground. The regulator was stringing you along every step of the way guys and you fell for it. They were just peeing down your backs and you believed them when they told you it was raining.

    So what else can be done? As I see it, the only alternative to this futile strategy is for a representative body to build alliances with and garner support from other parties that have something approaching the powers of influence that the likes or APFA and Libertatem never can. Hence I have asked APFA on several occasions (but never received a reply) just what Lord Deben does for his money in Parliament. Has he sought meetings with Andrew Tyrie? Has he sought to bolster support from members of the lower house? Has he done anything else at all apart from give a rousing, tub-thumping speech at APFA’s own annual dinner? Has he made any efforts to find out what body is supposedly responsible for enforcing the Statutory Code of Practice for Regulators and, if (as I rather suspect) there isn’t one, making a stink about it to somebody of other in government?

    Something has to change or else APFA’s likely just to spiral down the plughole with Libertatem not far behind. My money’s on the PFS in the form of Keith Richards.

  3. You really do have a real problem with Garry don’t you Cicutti ? Move on and “report” on some of the other hogwash you have in that locker of yours. You really are embarising yourself.

  4. Nic, I never thought of you wearing rose tinted specs.

    What advisers may want and what they will get or achieve are two very different things.

    1. Liberwhatsis and its cohort and predecessors focus on influencing Government and regulation. In my 30 odd years in the business I have only seen very minor achievements in this sphere.
    2. A Trade body representing all advisers? Not on your nelly. Those who are independent are independent for good reason, they are of independent mind and spirit and one may even accuse them of being mavericks. They will never get into bed with the likes of SJP and will always wish to differentiate themselves from the networks.
    3. Yes, you do have a very good point concerning technology, business strategy, professionalism etc – but these functions already exist within the Professional bodies who have the added impetus of being providers of SPS – which in fact makes them indispensable – an attribute that the so called Trade bodies don’t have.
    4. With the continuing pressures on margins, costs are an ever present imperative and while one has to join a professional body, one does not have to join a Trade Body and those who stay out effectively get a free ride – always assuming that the Trade Bodies actually achieve anything.

    Unless there is a complete rethink about the function and operation of Trade Bodies I will stick my neck out and say I doubt if they will ever gain much ground, let alone survive.

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