Nothing remarkable about that, I regularly receive anything from two or three to more than 20 emails a week from IFAs, all eager to discuss the latest iniquity they have suffered at the hands of the FSA or the Financial Ombudsman Service or to berate me for wayward comments in my latest column.
What was slightly unusual about this particular email, however, was its panoramic sweep – more than 1,800 words, initially linked to the retail distribution review but then taking in this particular adviser’s long career, his clients, how long he might stay in the industry once the RDR’s proposals are enacted in 2012 (not long), what he thinks is wrong with the financial services industry and the Government, not forgetting IFA trade bodies along the way.
Even that wasn’t the most noteworthy thing about the email, what really made it stand out was the fact that it was the third sent to me in one week by the same person. His second one was just shy of 1,200 words and the first, relatively brief missive, ran to about 500 words.
That’s pretty good going. I’m writing a book right now and I would be reasonably pleased with that level of weekly productivity. Except in this instance, email-writing is not this particular IFA’s chosen career – advising his clients is. Yet he seemed perfectly willing to spend several hours putting together some interesting and cogent thoughts about the industry and how he believes it has failed clients – and is being failed by politicians, regulators and trade bodies.
Before anyone accuses me of deliberately egging the guy on, I promise it was not like that, my replies were pleasant and, for a change, he was not having a go at me in particular.
Why am I mentioning this story? Mainly because, also on my return from the Lake District, I opened up my weekly copy of Money Marketing, where my eyes fell on a story in which Money SavingExpert website guru Martin Lewis says that banning commission will leave consumers without access to independent financial advice.
The same story goes on to quote Highclere Financial Services partner Alan Lakey, who says: “There are not enough high-net-worth individuals out there to satisfy the current IFA needs and, as a result, there will be a massive reduction in IFA numbers.”
It was that last comment that really surprised me, mainly because only last week I also read a piece to the effect that one of the side-effects of the recession last year was that it had reduced the number of high-net-worth individuals in the UK – defined as having assets of more than $1m, excluding their homes – from a figure approaching 900,000 to “just” 495,000. The number of “affluent” individuals, with assets over $100,000 but less than $1m, also known as “sub-high-net-worth”, is several times higher than that.
Now, assuming 25,000 registered individuals plying their trade as IFAs, the numbers of HNWs and those just below that category ought to be enough for most independent advisers to scrape a decent living in almost all towns and cities in the UK – and earn a bit more through some low-paid “pro bono’ work, flogging the odd mortgage, life insurance policy and Isas to punters who walk in through the door.
Except, that it’s not really like that, is it? For most advisers, the reality is that, despite brave references to HNWs at industry dinners, most of their work is focused on the clients I have just described, people with immediate but relatively small-scale needs, for whom the notion of paying large annual fees to have their financial affairs managed for them is not just hard to afford but utterly incomprehensible.
Unfortunately, the reality is that the majority of IFAs have ended up occupying a sub-space between traditional life company and bank salespeople and those who actually do manage HNW clients’ money. For a long time, that space provided them with a decent, primarily commission-based income, one they could milk with relatively little need for time-saving technology or highly specialised skills.
Indeed, some have found they had so much time on their hands that they could even pen several thousand words a week to errant journalists whose comments they felt sparked some creative writing urge.
The problem now is that the RDR, for all its imperfections – from the consumer side – is asking a series of much tougher questions of IFAs. The December 2012 deadline, although far too distant for people like me, looks like it will be an incredibly steep learning curve for quite a few advisers.
Think of it as riding the Hardknott Pass – it may seem daunting initially but the vast majority of IFAs will get over it relatively unscathed. But a few, like last Saturday’s riders, won’t manage it at all. How many actually do depends on the new level of professionalism they acquire between now and then.
Meanwhile, if that means a few less emails to me – or at least, emails that don’t run to book-length – I will fully understand.
Nic Cicutti can be contacted at firstname.lastname@example.org