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Model behaviour

How’s your model holding up then, I ask, slightly nervously of advisers.

By and large in the last couple of months, apart one from an understandably moody mortgage broker, the answer seems to be be not too badly.

The advisers’ take seems to be that while clients have moved from feel good to feel nervous rather than outright feel bad, things are clearly tougher with houses prices and stock markets doing no-one any favours.

So looking across the market I suggest that for mortgage brokers there is massive pressure but an opportunity to crank up protection sales if not an outright opportunity to become full advisers.

The IFAs that tend to have a high percentage of mortgage business are also feeling the pinch though of course they also have the luxury of shifting the weight on to another leg at least. The call to “specialise or die” is ringing a little hollow in many mortgage brokers’ offices.

For those advisers still most dependent on upfront commissions might I hazard that first of all there is more protection to be written and for all that people are not feeling overwhelmingly happy, some clients may be taking this chance to sort of their financial affairs. It might help consolidate savings or even hopefully start new plans.

There will be more money in cash, of course, while structured products, mostly those that offer proper downside protection one of the flavours of the month – as opposed to capital munching precipice bonds. All terrain funds particularly truly multi-asset vehicles clearly have an appeal in these markets to judge by the sort of funds being promoted by managers through fund supermarkets too though I can’t help wondering about timing.

The baby booming clients of course are still sitting on a lot of cash but will probably be feeling that they are sitting on a quite a bit less money regardless of the reality of the gains of the last ten or twenty years overall.

So my instinct is that business is down a bit. There is less coming in the door for those who take upfront commission, fees as a percentage of funds under management will have fallen a bit if funds under management have too. Even the pure fee charging advisers may find clients wondering if a little bit of the pain might be shared. That said, if top end advisers are still – as many insist – taking more and more market share – then maybe they aren’t feeling the downturn at all.

For those in the right place there is still an overwhelming advice need whether to sort out income protection, retirement planning or indeed realign portfolios for these volatile times.

My hope is therefore that IFAs are doing ok and with this funny sort of downturn they are much less likely to have made the sort of mistakes than during the TMT fallout. At the time, I feared that some advisers at least were hiding under their desks not picking up the phone.

Things this time around things just do not seem anything as bad. Still I’ll keep asking in the next couple of months. Please feel free to tell me in no uncertain terms that I’m talking nonsense.


The joke’s on us

Sir Callum McCarthy was asked last week whether his views had changed on the retail distribution review since he made his speech at Gleneagles in late 2006. He said the wider world felt a very changed place since he made that speech and that he had thought it important back then to focus on whether the business model served the interests of the industry and its consumers but that there was still no definitive answer to that question.


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