More than a passing resemblance to Paul Newman, don't you think?” asks FSA
press officer Jackie Blyth as she hands me a photo of director of
investment business Michael Folger, a piece of information which is duly
filed in case he needs to be charmed.
But it turns out that such journalistic tricks are not needed. He is the
one who does all the disarming with a few winks and a steady gaze. Just the
sort of social skills you would expect from a man who has mixed with some
of the most powerful people in the country during the course of his career.
Folger, 51, spent 14 years at the Treasury between 1971 and 1986. As head
of the economics briefing division, he was responsible with coming up with
“killer facts for Mrs Thatcher's handbag” which he delivered to her on a
His other major role at the Treasury was overseeing the defence budget –
but that is a subject he cannot talk about for another 30 years under the
Official Secrets Act.
Like a true civil servant, he refuses to be drawn on his political
orientation, saying he “votes for common sense and sometimes the wrapper
But the thrill of public office eventually wore off and Folger went over
to the private sector in the mid-1980s when he joined the London office of
investment bank Dean Witter in the Eurobond division.
He says: “It offered a different set of experiences – I arrived in Angola
during the civil war, for example – and the salaries were better.”
In 1991, he was headhunted for the position of managing director at Nirex,
the radioactive waste specialist. Folger says he was chosen for being the
only person in the country who understood a balance sheet, how the
Government worked and basic phy-sics, which he studied briefly while at
Selwyn College, Cambridge, before switching to economics.
IFAs might think his involvement with such a disaster-prone industry stood
him in good stead for his next career move to the FSA.
What attracted him to the role? “I was intrigued by the FSA and thought it
would be exciting to bring together different cultures into one. I also
have to balance statutory objectives and consumer thinking with companies'
needs to make a living.”
The FSA's investment business division supervises some 6,000 financial
services firms, including IFAs, on behalf of the self-regulatory
organisations, the PIA, Imro and SFA.
It also has the main responsibility within the FSA for policy on the
conduct of investment business, including polarisation, and preparation of
the conduct of business sourcebook, which sets out the rules and guidance
which will apply once the Financial Services and Markets Act comes into
Does he share IFAs' view that the burden of compliance is too great at
present? He says: “I hope it is not a universal perception. I am aware that
the pension review was very painful and bruising and we hope to get
busi-ness right first time in future.
“In time, we want a constructive relationship with the IFA sector and plan
to move away from an adversarial one by working with the grain of the
industry. That includes dealing with the rise of the more demanding
But IFAs do not seem too willing to extend the hand of friendship. They
view the regulator as “bureaucratic”, “heavy-handed” and “threatening”
although they do say they look forward to the “FSA in its new shape” or, as
one puts it, “a grown-up regulator”.
Since joining the FSA in June 1998, Folger has led its approach to
specific issues such as mortgage endowments and stakeholder pensions, which
are still high on the FSA's list of priorities.
Folger says one of the biggest challenges with stakeholder is getting
people interested in pensions, a fact borne out by recent research into
decision trees which saw consumers abandon them through boredom.
He says the Government is planning a campaign to publicise the low-cost
product and the FSA's consumer division is compiling an information
package. But he warns that employers will also have to get in on the act if
stakeholder is to succeed.
Folger says the FSA will be publish its findings on endowments in the
autumn after the reprojection letters currently being sent out – three
million so far – have had their full effect. He says: “We are pleased
people are not panicking and cashing in their policies.”
A personal challenge for Folger is finding “25 hours a day”. The 12 hours
he spends working each day are taken up by a constant round of meetings and
reading in order to keep abreast of policy.
His colleagues confirm this, calling him hard working and focused.
Perhaps the nature of his work is why he takes refuge in woodwork at his
home in Dulwich. He explains: “I enjoy working with my hands. Woodwork is
something I can have within my control that does not involve going through
Folger also gets wrapped up in looking after his two boys, aged eight and
11. He is “not currently married” although he has tied the knot twice in
the past and does not rule out a third time.
As for what else lies ahead, he says: “I would like to be remembered as
someone who makes a difference, including at the FSA.”
SRCE: Money Marketing
HDLN: Supermarkets will not leave IFAs on shelf
It seems that every time you turn round, someone has opened a so-called
Generically, this is a concept that allows investors and IFAs to access
managed funds from a wide range of providers via a single route.
Fund supermarkets are, of course, yet another example of new methods of
financial management being imported from the US where, according to a
recent report by Cerulli Associates, they now account for around 80 per
cent of all new fund inflows.
Their share of all mutual funds under management in the US has tripled to
9 per cent in the last three years.
The Cerulli report goes on to predict that, by 2005, similar organisations
in the UK will account for 35 to 40 per cent of net inflow to mutual
Forrester, which has also examined this issue in detail in its recent
report, Insurance Supermarkets Arrive, predicts a more conservative market
penetration but still ascribes a 20 per cent market share to fund
supermarkets by 2005.
The US market is dominated by two major players, Charles Schwab and
Fidelity. Cerulli is suggesting that although there will be in excess of a
dozen such services open by the first quarter of next year, only four or
five will survive.
I do not believe these predictions take sufficient account of the
differences bet-ween UK and US distribution channels and the very vibrant,
not to say resilient, nature of the IFA community.
Both the dominant US supermarkets include strong direct equity services.
While individual share ownership has surged in the UK over the last 18
months, due in no small part to the existence of online share dealing,
there have been a number of reports recently to suggest that the decline of
dotcom stocks may now have reined in the extent of such growth.
But to underestimate the potential effect of supermarkets would be a grave
error. Fund supermarkets certainly present a challenge to the IFA community
in its position as the dominant distributor of managed funds.
The latest figures from Autif show that, in the year to May 2000, IFAs
were responsible for nearly 55 per cent of new managed fund business
although only achieving 41.6 per cent of sales linked to Isas.
Are fund supermarkets friends or foes? The answer is almost certainly
both. Supermarkets come in many shapes and sizes. Some, such as
Consolidated Funds, are only available via IFAs. Others, such as Fidelity,
are open to both the company's IFA business partners and direct customers.
Egg has its own super-market for collective investments and will also be
adding share dealing.
InterAlliance's site allows consumers to purchase funds but offers no
aggregation facilities as a supermarket. The recently launched
Virginmoney.com has at least as many supermarket characteristics as the
InterAlliance site but Virgin is keen to say it is not a supermarket.
Confused? Imagine what it is like for the consumer.
There can be no doubt that some of the so-called supermarkets seek to
replace the traditional IFA relationship. However, as Egg Investments
operations and systems director William Jones noted at last week's
e-commerce Lunch Vox run by Mansion House Executive, running an internet
operation means you can do without the phone but you still need people who
can answer quickly and competently.
Even though many of the supermarket sites such as Egg are offering a wide
range of research and decision trees, I believe IFAs have the opportunity
to harness the power of the information offered in this way and complement
it with customer-focused advice as the best value-added proposition for the
In the US, Charles Schwab has a very active programme, Advisor Source,
which directs customers with holdings of over $100,000 towards professional
advisers. Several UK operations are indicating that they will take a
similar approach and this could be one of the main services that IFAs might
look for in choosing their supermarket partner.
Equally, the supermarkets may well have a role in incubating the smaller
investor until such a time as they have sufficient investments to warrant
taking financial advice.
For the individual making a modest investment of £100 a month or less
into an Isa, either the adviser is going to be giving advice on which they
are not covering their costs or, if the advice is fee-based, the cost is
likely to be totally disproportionate to the level of investment.
In these circumstances, some sort of low-cost or even free guidance could
assist an investor before the level at which it becomes cost-effective for
them to take advice.
It is important to recognise that choosing which supermarket to work with
will probably be one of the most imp-ortant strategic decisions that IFAs
will make. Increasingly, the sort of technology services provided as part
of such partnerships will have a key effect on the management of the whole
I foresee a day when this type of service could replace the need for many
IFAs to have their current small back-office systems. Such is the nature of
many of the services in planning that it will not be practical for IFAs to
spread clients across multiple systems. Asset allocation is a perfect
example of where this could occur.
Currently, there is a fair amount of pessimism around the industry over
the potential outcome of the London School of Economics report on
polarisation. This is not a view I share. Having looked at how fund
supermarkets are operated in other countries such as Australia, I believe
that a move to the white-labelling option could provide an opportunity for
the continued existence of an environment which allows IFAs to offer advice
on products from a wide range of different fund managers, without the
current polarised environment.
The concept of independent advice has served consumers and IFAs well but
the technology is increasingly available that may well make it entirely
appropriate to move to the next phase of financial planning. In such an
evolution, fund supermarkets would have a major role to play.