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Keith Richards: Time to work as a united profession

Static adviser numbers is only one side of the advice equation and fixating on numbers ignores the fact that more and more people need access to professional financial advice.

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As many of you will have seen, the Financial Conduct Authority has published updated figures on the regulated financial adviser population in the UK.

The figure for regulated intermediary advisers at 10 January 2014 was 21,881 which is a 1 per cent rise–on the figure of 21,684 reported in July 2013.

As anticipated, however, we continue to see a reduction in the total number of bank and building society advisers which has fallen from 4,604 in July 2013 to 3,556 in January 2014. So although the overall figure has remained fairly stable, adviser numbers in this sector have fallen sharply and have slowly transferred in part into the ‘financial adviser’ total. The other categories including discretionary wealth managers, stockbrokers and life companies which make up the difference.

Given our continuing post-RDR focus, we cannot ignore rises and falls in adviser numbers and the positive growth in numbers last year was mainly due to advisers re-entering the market – in most cases of course they never left.

Speaking to Personal Finance Society members at regional events across the country it seems evident that the majority have not lost clients as a result of changes to how they are paid.

This echoes the findings of a recent poll by Fidelity Worldwide Investment and FundsNetwork. The poll of more than 200 advisers found that less than 10 per cent of those questioned had lost clients whilst transitioning to a fee-based remuneration model, equating to less than 15 per cent of their client base.

Whilst the adviser community remains more stable and robust than forecast, both pre- and immediately post-RDR, the 6 per cent increase in total population reported during the first half of 2013, has moved to a fall, albeit only a marginal net reduction from 32,690 to 31,220 since last summer.

FCA chief executive Martin Wheatley has also pointed out, as reported in Money Marketing, that a number of factors have led to the ‘advice gap’, including tax and Government policy. The RDR alone is not the only contributory factor – there has been an underlying reduction in the use of advice and the level of savings and investment. It is important that we focus on the issue of demand from the public as well as that of supply.

I agree with his assertions that the adviser population has been in decline for the past two decades for the reasons stated and whilst regulation has played its part, successive governments have certainly made it easier to borrow than to save.

Increased professionalism, greater transparency, lower complaints and an increasing consumer need for advice does, however, present an opportunity to address the ‘advice gap’ and deliver better consumer outcomes. An aging population is additionally helping to focus attention on the importance and value of professional advice with topical debate surrounding the OMO and government ministers recently joining the call for mandated advice as part of the Care Bill.

As a financial planning profession, which has come a very long way in a relatively short time, we should take a holistic view of the whole market, rather than fixate on numbers, and look at ways to influence the future direction and encourage consumers back to advice. By engaging in constructive and meaningful debate with the Government, regulator and other bodies we will be a step closer to tackling the underlying issues.

A number of the main professional and trade bodies will be meeting towards the end of January to discuss common issues and opportunities in consideration of working together as a ‘united profession’ for the greater good of the public and industry in general.

Keith Richards is chief executive of the Personal Finance Society

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Comments

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

  1. Whilst I concur with a lot said in this article I can only see a single direction for financial services in the future.

    1. Consumers previously serviced by the banks probably never really needed to ‘invest’ and are not really the type of clients advisers want.
    2. Advised clients will continue to be advised (as will their children)
    3. The remaining younger, prosperous, technologically focused population will learn to self-invest online – as they do with everything else.

  2. Great to see the Professional & Trade body’s coming together for the greater good – fragmentation will never succeed and has undoubtedly contributed to the lake of effective influence any group has had in the past.

    I agree with the PFS that the importance and value of advice is gaining recognition and from a personal perspective we have never been so busy.

    All of the advisers in my office have signed up to the Consumer Confidence Campaign initiated by the PFS last summer and I have been pleased to see other organisations I subscribe to promoting the campaign from their own perspective.

  3. Keith
    I’m sure you are well meaning, but you have been singing the same song for so long now (even in your pre PFS days) that to be candid it’s getting very boring.

    Matthew’s points are spot on. Many of us have never been busier and have never experienced what is termed the ‘advice gap’.

    In all your statistics you don’t make a distinction in the adviser community between independents and the others – but then why would you – the PFS is notoriously silent on the issue.

  4. Good advisers and good adviser firms must surely have their clients’ best interests, as well as the wider public interest at heart. On this basis, I fail to see how anyone can criticise an initiative that attempts to unify our sector and promote consumer confidence.

    It appears however that some individuals generally can’t find anything positive to say about anyone or anything . . .

    Incidentally, PFS is a professional body for good and ethical financial planners, regardless of whether they be Independent or Restricted – and this is not a position that (to my knowledge) PFS has ever hidden/denied/been deliberately silent on. There are certainly those who would prefer PFS to be for IFA’s only, but that is (in my opinion) an ill-informed view of the proper role(s) of a professional body.

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