View more on these topics

Music to whose ears?

As we approach the end of summer – and we know it is the end of summer not because of this volatile weather but because the shops are now stocking their new winter ranges – it is time to prepare for a period of change like has never faced financial services before.

Money Marketing readers need to swap their Bermuda shorts for a quiet room to take in what treating customers fairly, the retail distribution review and the markets in financial instruments directive will mean for their businesses.

No point concentrating on only one of these regulatory areas as they overlap and have considerable bearing on each other.

TCF (which friends of mine say sounds like a girl band) is, in my mind, the application of common sense in how we communicate with clients, what we sell them and how we sell to them.

Mifid (a heavy rock band?) is a huge European directive attempting to put European financial services on a level playing field. Do not underestimate Mifid as it will have far reaching implications across business processes resulting in, for many, significantly changing business models at considerable cost.

RDR (an American rapper?) is the review that will create more column inches in the financial services press until the end of the year.

Much discussion has been taking place over how wonderful or how difficult it will be for IFAs to become more qualified. Research commissioned by IFA Promotion shows that three-quarters of consumers would like an IFA who has qualifications above the benchmark. But when six million consumers searched through last year to find an IFA, only 25 per cent selected on qualifications above benchmark.

Research, after all, may reflect what consumers think but not what they go on to do.

Headlines appear such as, Nearly 1,000 achieve chartered status, but how many of them are IFAs? It tends to be the sponsored product provider head office staff that have the time and the financial backing to get to this academic level. The jump to chartered or certified planner will be a hurdle too high for many quality advisers who have the trust and loyalty of their community. Should the level required in exam terms for professional advisers be APFC with more emphasis on continuing professional development and assessment? After all, it has been proved that a 16-year-old can gain chartered status. I, however, would rather have a 50year-old with 20 years IFA experience advising my mum about her pension options.

As the primary adviser flogs expensive sole provider simplified products over bank counters, we must not forget that in today’s market research undertaken by Consensus shows that 90 per cent of consumers are satisfied when they have been to see an IFA. If the RDR rocks forward as written, the distribution market will go back 15 years to being polarised – direct salesforces and independents.

I have heard some nonsense about who in the future RDR world can offer whole-of-market advice. Consumers need to have whole-of-market advice if they are to have the most suitable financial advice. As for making fees-only a prerequisite for professional financial planners, can anybody tell me how many completely fee-based advisers there are now and exactly what fee-based is? The answer is that nobody can, as nobody is able to collect the data. Why then is there a resistance to making commission offset the standard?

The consumer agreed remuneration paperwork could clearly show that the commission comes as a cost from the recommended product and the adviser will be paid according to the time spent and service delivered. No need for the client to write a cheque with VAT added. After all, this is how we buy the vast majority of products in the UK from cars to make-up. We do not pay the salesperson for their expert advice, it is included in the product cost.

It has always been said that IFAs want to be like solicitors and accountants but neither professions have any products to recommend so there is no choice about their remuneration.

May the sun shine for what is left of summer before I drown in client requests to explain what all this regulatory change means.

Kim North (kim@ techand is director of Technology and Technical


Property trusts take a high gear

Getting paid on the amount of assets managed, inflated by bank borrowings, was a common feature of the split-capital investment trust structure. It is one that still exists today although mainly in property trusts. Listed direct property funds, generally in the offshore sector, tend to base their management fees on total assets, including borrowings. As […]

Repricing returns rates to reality

The recent repricing by non-conforming lenders will see sub-prime mortgage rates return to a sensible level after months of rates being too competitive, says John Charcol senior technical manager Ray Boulger.Boulger says that although sub-prime borrowers will be feeling the effects of the latest rate increases after several major non-conforming lenders repriced last week as […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm