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Multi-ties leave us guessing on their next RDR moves

We may be in the midst of a phoney war as far as regulation is concerned.

The big multi-ties have rarely gone public with their strategies or arguments. They will certainly be lobbying against at least some of the changes the FSA envisages in the RDR. They may well be lobbying as if their business lives depended on it.

But in the absence of public discourse, I am going to imagine some of their arguments. At the moment, it is all about titles, status and disclosure but we don’t know if the sales bracket is going to carry any other restrictions on what can be advised on.

But some of our sources indicate that multi-ties and their influential chiefs may have got short shrift from the FSA so far and may well be heading to the Treasury – the slightly risky strategy of complaining to the boss’s boss.

Much as Money Marketing would love to have a crack team of flies to fly to various walls, listen and then buzz the information back to us, we don’t so we are left with calculated guesses. Here are mine though the arguments deployed depend slightly on the sort of multi-tie we are talking about. The first might be regulatory:

“We are a key part of the sector, our advice is properly controlled and accountable. We provide a more controlled environment for advisers, more selective products if not more to select from and therefore give our advisers much less freedom to get it wrong.

“Even if it goes wrong, we are a big organisation and can counteract and compensate. We have a strong research function and our fund selection is exemplary through a rigorous investment research process.”

They may even add: “We are up to date with all manner of trends in passive investment and some of that margin will go back to clients.”

The second is economic:

“If you hurt our businesses and this will hurt our businesses, you will hurt our ability to get people insured and saving and the savings and protection gaps will grow.”

They may even add: “We are among the few well capitalised businesses in the market. Why damage us? We work in partnership with insurance companies and do not attack them with damaging fund switches.”

The third is quite simply bashing the opposition:

“Those IFAs. They have sold you a pup. They sell as much as we advise. But they simply churn every five years and get their pet dog to do the fund picking rather than having sensible relationships with providers. They cannot have access to global investment trends which we can spot and they are all getting too old. Their panels are actually more restrictive than ours. All they do is recommend Standard Life.”

The fourth strand could be classed as a little bit of blackmailing and has a distinctly bank like feel to it. I have no idea if anyone would dare say this but we don’t have the strongest of Governments at the moment and it is calling in a lot of favours from the high-street giants – Bradford & Bingley bailout anyone?

“We will only help you serve the low and even lower middle income groups, the ones only we can reach, if you let us make some money of those higher up the income scale. And if we screw up, we will compensate. Rights issues or not, we still have the deepest pockets in the market.”

My final tack is the clubbable one:

“We have known each other for years. I have always been able to support several worthy causes and voluntary and public service initiatives. Couldn’t we see our way to a little flexibility?”

There are some easy retorts to some of these arguments but not all. For example, it is high time someone checked out the quality of bank advice to their less well off customers following the PPI scandal. As for the big adviser multiand single-ties, it is also time that someone considered how they disclose things, how they charge and how they are paid for advice both upfront and ongoing. Commission override anyone?

But in some areas, as I say, the multi-ties may have a strong case about their processes and research.

Of course, this may all be stuff and nonsense. Perhaps the multi-ties are poised to meekly embrace the benefits of whole of market advice and show you old IFAs how to do it.

But they are more likely to be fighting tooth and nail.

It would be nice if they would make their arguments a little more publicly. Then I could stop writing articles quite so full of conjecture and the multi-ties could demonstrate they have the courage of their convictions to back their model rather than relying on having a word in the right ear.


Tax and figures

Offshore insurance bonds offer a number of potential tax advantages. These include the fact that capital growth within offshore bonds is virtually free of tax, policyholders can switch between funds within bonds without triggering a capital gains tax liability, bonds can be assigned to lower-rate taxpayers and the policyholder can decide when to cash them in and thus when they face their tax liability.

Time for a new approach to asset allocation

Trevor Greetham, RLAM’s head of multi asset, introduces the recentlylaunched RL GMAPs. Asset allocation has become an increasingly difficult challenge for investors and advisers in the years since the financial crisis. Sometimes violent price swings in stock and commodity markets coupled with the collapse in the rate of interest on bonds have made it harder […]


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