One of the things I find about Money Marketing is no matter how assiduously you read it, little gems slip through the net. It is only a week or two later, perhaps when you are directed there by someone else, that you get a change to study them properly.
So I am grateful to Informed Choice executive director Nick Bamford for indirectly alerting me to one such article via his own column last week. Nick referred to an article in Money Marketing where FCA Consumer Panel chair Sue Lewis was quoted as saying that “not much has changed” in the field of financial services.
Her comments came in a series of articles for Apfa to mark that organisation’s 15th anniversary. Lewis said: “Successive FCA reviews of RDR implementation have found problems, such as the use of ‘in kind’ inducements to advisers to sell particular products, and failure to disclose costs fully.
“How can firms expect to be trusted when they demonstrate repeatedly that they are not trustworthy?
“It seems fair to say that not much has changed in the past decade or so across the industry, although we have not yet seen the full impact of a dedicated conduct regulator.”
For Nick, this kind of stuff smacks of “adviserism”, a word he uses to describe a view of the world where all advisers are lumped together and are all classed as bad.
He says: “Suggesting that the final services industry is some kind of homogenous group of people sounds to me like some kind of ‘ism’ (just like suggesting all men or women behave the same = sexism, or all people of a particular race behave in the same way = racism).”
Nick counterposes his own view, which appears to consist of IFAs going about their work quietly but effectively, helping clients resolve their financial conundrums in such a way as to engender in them that most elusive of qualities: trust.
“Just about every IFA firm and individual that I know has a client base made up of people who absolutely trust the advice and service that they receive from their adviser,” Nick says.
Contrary to Lewis’ view, Nick adds things have changed significantly: advisers have worked hard to obtain higher qualifications, improved the quality of their advice to the point where unsuitable products are “avoided like the plague”.
Advisers have “successfully engineered a move away from commission-based sales to transparent adviser charging even though a large number saw such a move as less than positive.”
Nick’s positive view of most fellow-IFAs is unsurprising. And there is some truth in it: contrary to what Lewis says, the IFA landscape has changed significantly in the 20-plus years I have been writing about it.
Perhaps also unsurprisingly, however, Nick adds none of the positive transformation he refers to appears to have had anything to do with regulation of the industry: “If trust has been destroyed then the blame lies primarily with a 28-year old broken regulatory regime that has patently failed to serve the consumer well.”
Nick appears to believe without regulatory intervention over the past two decades all the changes he mentions would have happened by themselves, with the industry benignly delivering more product clarity and less opaque – and costly – charging structures.
Meanwhile, advisers all over the country would all have got out of bed one morning and, while grooming themselves for the day, collectively concluded that their far-less-than-O-level qualification standards were not acceptable.
On their way to the office, the overwhelming majority would also have decided they no longer preferred the use of commission as a form of remuneration and fees for advice given was a much better alternative.
Somehow, I find that hard to believe. As Nick knows only too well, having read Money Marketing for longer than I have been writing in it – but only just – every initiative that aims at empowering consumers, most of which he approves, has had to be imposed on the industry.
While it is true many advisers like himself have been at the forefront of introducing measures that highlighted the value and good standing of professional IFAs, others in the industry have let Nick and his colleagues down.
So while it may be incorrect to say “not much has changed” in the industry, Lewis is right to suggest that one dominant tendency within the industry has always been try and circumvent rules to mitigate their impact.
Ironically, Sue and Nick’s views are closer than they imagine in one sense: she says notwithstanding the RDR, “less than a third of people who had not taken advice were aware of the new emphasis on professionalism and transparency.” Nick argues “there are more variations of advisers than you can safely shake a stick at.” The issue then is not so much over the RDR itself but how any positive changes have been communicated to the public.
The underlying question of “trust” then becomes enmeshed within a complex ecosystem, where “good” IFAs are tiny microorganism within a wider and still-tainted industry pool. For trust to flourish it needs the entire pool to be drained and cleared.
Simply pointing to the cleaner parts of it only shows up how dirty the rest of the industry still is.
Nic Cicutti can be contacted at email@example.com