We are now under the spell of that post-financial crisis leveller – fairness. It was not important before, so long as money was easily accessible and everyone was kept afloat by the imported American dream.
The dream is now crumbling and the indulgences enjoyed by fund managers and advisers for years have become taboo.
Although the moves actually began some time ago, hidden charges on investment funds increasingly came under the microscope last year.
Now we even have a group, True and Fair, which campaigns for transparent costs. With all their hidden charges such as trading costs, it is easier for all to see how insurance and pension companies were able to dole out such big commissions to adrenaline-junkie sales reps and advisers, while absorbing abominable churn rates.
But it is all change. Gone are the legions of overpaid sales reps who invited themselves into adviser offices, turning advisers into zombies by chanting the litany of the latest commission-ladened investment fad, force-fed by the sales rep’s own win-a-Porsche sales target, trickling down to clients who in turn believe the hype.
And there is the problem – believe the marketing hype and investments that are clear and fair no longer seem so attractive. They do not hide their charges.
Thankfully, we are now left with reps who really do add value to an adviser’s day. The client is at the centre, not the sales rep.
The business model has changed, too. Firms are no longer at the mercy of insurance companies that prop them up with commissions but driven by the ongoing value that advisers deliver to clients. True independence is fair.
It did occur to me that with greater independence from life assurers, access to some of their technical expertise would disappear as quickly as the commissions. However, there are now reputable independent specialist companies that we can subscribe to for this.
We are also taking more pride in our own CPD. It used to be ’free’ but now sometimes we actually do have to pay for it and are therefore rightfully more selective about what is relevant to our skillset and what meets our clients’ needs.
I also have sympathy for older advisers having to change to the demands of today but, even here, they are realising greater life-fulfilment by using their strong relationship skills in becoming an introducer of business, rather than getting bogged down by exams and suffocated by red tape. That is a better business model for everyone.
Moan about the implications of the retail distribution review all you like – but fairness would have led us to the same outcome.
Mel Kenny is a chartered financial planner at Radcliffe & Newlands