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Phil Young: Time for professional bodies to lead by example

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I noted Personal Finance Society chief executive Keith Richard’s recent opinion piece in Money Marketing on the need to curb the increasing cost of regulation.

While well intended, I wonder if the PFS might take a lead on this principle by reducing the punitive costs imposed on those misfortunate enough to pass sufficient exams to progress to chartered or fellow status.

I know a number of people who have the qualification but who do not wish to pay higher fees. Presumably, the PFS is at the same time arguing more qualified people pose a lower risk and should pay less in regulatory fees.

While fees for those studying for these levels start at £74 per annum, those who become chartered are faced with an annual membership fee of £247 should they wish to take up the designation (see table below). The PFS gains the additional benefit of free publicity when it is used. This is without the cost of exams and course books along the way.

Attracting young talent

There is an argument for reducing costs for those newer to the profession, who could probably do with a peg up from the rest. The current structure does not do this, as I am not sure there is a positive correlation between higher qualifications and greater experience, age or remuneration.

We have seen Vito Faircloth become the youngest ever fellow at just 22, with great coverage in the press. He did this in just 21 months – but his reward was a 168 per cent increase in his annual PFS fees.

The PFS released figures in January breaking down its own membership by age (see chart below).

Seventeen per cent are under 40, while just 2.1 per cent are under 30. It would be interesting to see the overlay of qualifications against age demographic but, given the small numbers involved, it seems to me that, without much difficulty, a more equitable charging structure would subsidise the new entrants we desperately need to the profession, not just those with fewer qualifications. That is assuming we want to subsidise it at all.

Anyway, back to my point about the PFS telling other businesses how to make their charging structure fairer for advisers.

agegroupWe will no doubt see lots of grandstanding from professional and trade bodies over the coming months. Last year the longstop was The Great Campaign; this year it is Financial Services Compensation Scheme costs.

This is a debate well worth having, and I am sure it is sensibly done behind closed doors. But the soundbites we see from trade and professional bodies are dumbed down to meaninglessness, and I fear many advisers will just gloss over them. There is no reason why we should not see the cut and thrust of real debates in public and available on a webcast to view. The technology is there.

We would see the depth of the discussion and the detail. We would see the real opinions expressed, not the populist soundbites given for adviser consumption. And we would see how those appointed to represent advisers really fare. Some industry figures are passengers in these discussions. Some shine. We would move the debate outside the confines of the Square Mile. Wouldn’t it be great to get some of the 17 per cent involved?

Bringing a better debate

For now, we are left with two conclusions. Either there are no well thought out views on contentious issues such as FSCS funding, or advisers are too thick to understand them. I do not believe either are true. It is time to open the doors on these important debates and bring them into the light.

There is also a need for trade and professional bodies to lead by example, modernise and practice what they preach if they want to be taken seriously by all concerned. The consequence of failing to do this is the ongoing disengagement of another generation and the gradual extinction of a fledgling profession.

Phil Young is managing director of Threesixty


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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. I can’t see you have addressed the essential point of who paid these fees employer or employee? Also o see no comparison with other professional bodies, when this was done in the past PFS fees were much lower than other professional bodies. Out of interest do 360 charge on a demographic basis?
    The reality is that £20 a month is not unaffordable and I see no evidence of it stopping younger people qualify
    The real issue here is employers should bear the cost of the fees esp. where it’s a chartered firm

    • We charge based on time and materials Rob, old chap, which I think is fair enough and easy to understand whether you agree with it or not. You can see where the money goes. I can’t see why you pay more money per annum when you’ve already paid more in exam fees etc, it’s basically making money by licensing a name. I can’t understand the rationale. Whether the employer pays is a decent debate, the honest truth is that many don’t so it’s unfair even if it’s affordable the better qualified are subsidising the less well qualified with little more to it than that.

  2. This is an interesting but also slightly confusing article at the same time. I would like to see the PFS being a much more effective and proactive, representative professional body.

    I’m happy to pay the fees for both myself and our team and think Keith Richards is heading in the right direction. Regulatory costs have become a huge issue whilst the current media focus on advisory charging (Paul Lewis et al) somehow has gained prominence and I would like to see more professional lobbying in this respect.

    • Problem is it makes them a trade body and I’ve heard they can’t/won’t cross that line. One for Keith to answer but I agree Keith does a good job in this regard.

  3. Its more of a joke that SPS’s are handed out to people who have had multiple firms shut down for massively inappropriate pension investments.

  4. Richard Libberton, FPFS Chartered Financial Planner 18th February 2017 at 10:35 pm

    I was not ‘misfortunate’ in attaining my qualifications, quite the opposite. Why do you think advisers strive to achieve Chartered or Fellowship status? Do you think the cost of membership is really a consideration? You also missed the tax implications of paying those paying professional subs too, which is clearly a factor in your argument. Pretty lazy journalism.

    You must also know why the demography of our profession is as such and the PFS has recently launched an initiative on this matter, in an attempt to bring in younger talent to the profession. Keith Richards is leading a highly commendable charge, bringing our profession forward and should be applauded for his work. I personally have no issue with my fees, regardless of who pays (see my comment re tax above).

    I note your article also missed out the benefits of PFS membership at local, regional and national levels. Perhaps your energy should be directed towards more pressing issues such as absurd regulatory fees and an inconsistent FCA vs FOS? I agree with Rob as always, maybe take a look at professional subs on the actuarial, legal and accounting professions too and present a more balanced view.

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