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Nic Cicutti: The better way to respond to charges criticism

A long time ago, shortly after starting out on a national newspaper, I needed new angles from an adviser on a story I was writing. My boss suggested calling Justin Modray, then an adviser at Chase de Vere. I rang him and, true to form, he provided a mass of useful information for my article.

I was not the only journalist making use of Justin’s talents at the time. For a long while, a skim of national personal finance sections would see his name in print almost every week.

These symbiotic relationships are part and parcel of financial journalism. From our perspective, someone who understands deadline pressures and can drop everything to come up with fast, relevant and vividly expressed commentary is like gold dust.

For the adviser, the opportunity is that of building a business based on the unspoken – and highly optimistic – view of readers that if a person is being quoted approvingly in their daily read, then he or she must be reasonably kosher.

Justin understood the potential synergies of that journalist-adviser relationship better than most. It is a testament to his skills as a talented self-publicist (and I am not using this phrase in a derogatory way) that more than 20 years later he is still being quoted in the media on a regular basis.

Only last week, Money Marketing profiled Justin and his firm Candid Financial Advice, the business that grew out of his website Candid Money, following a claim that clients are paying advisers more than twice as much compared with 2012, when a ban on sales commission was introduced as part of the RDR.

Leave aside the factual basis for his claim, which is contested by some advisers. This time Justin is not working for someone else – as he was at Chase de Vere, RJ Temple and Bestinvest – but for himself. And as any self-publicist knows, it also helps in your dealings with journalists if the underlying business proposition your firm represents is one that includes core ethical values they and readers they write for also believe in.

Which is why Justin’s relentless campaigning about adviser charges increasing in the post-RDR world is important. It not only expresses his genuine sense of concern at this alleged turn of events, but is also beneficial to his own business model, which involves a proposition where charges are both prominently tapered depending on the size of a client’s portfolio but also lower than many of his rivals.

In that sense, Justin’s marketing approach is similar to that of another relentless, now-retired, campaigner – Hargreaves Lansdown’s Peter Hargreaves. Some advisers may recall it was Peter who married an unshakeable conviction that upfront indemnity commission was “unacceptable and obscene” with a business model that focused on the longer-term benefits of trail commission, as Hargreaves  pulled in billions of punters’ money over the years.

Let me stress, my unease is not with the Hargreaves commercial model itself. Even with its imperfections, it has benefited many hundreds of thousands of investors and pension savers over the years. Nor do I have a problem with Candid Money’s charging structure as such: it is one of a number that can deliver better outcomes for consumers, assuming price is the single determinant factor in their overall financial needs.

The worry, originally with Peter and now with Justin, is two-fold: one is that, by default, you may inadvertently end up elevating what you do as the morally correct option for all advisers and their clients. In fairness to Candid Financial Advice, that is less of an issue.

While it’s easy to criticise some of the outcomes of the RDR, we need workable proposals on how to overcome them

The second is that, while it is easy to criticise one of the outcomes of the RDR – that many advisers have adjusted to it by making no modifications at all to their underlying client proposition on either charges or service – we need some workable proposals on how to overcome some of the problems identified by Justin.

For example, the fees table on his website is great on setting out Candid Financial Advice’s sliding scale of charges. It also tells me the level of service I can expect for my ongoing annual fee.

But we all know the time necessary to provide quality personal advice to resolve a client’s issues can be unquantifiable until you have assessed the need.

What we really need is two things. One is for advisers’ trade bodies, or even a comparison business like Unbiased, to collectively agree a set of two or three minimum service standards (bronze, silver, gold, anyone?) that clients might receive from their advisers.

The second is for the regulator to create a selection of financial issues that firms can clearly state how long they would take to resolve and then manage on an ongoing basis, as per the service standards outlined above.

A combination of the two, prominently displayed on all advisers’ websites and promotional literature, would give prospective clients a sense of what to expect and what to pay.

Advisers tempted to respond to Justin’s views by making snarky comments should instead think about how they can match and surpass the openness he demonstrates on Candid’s website. Surely that is the best response to criticism.

Nic Cicutti can be contacted at



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There are 13 comments at the moment, we would love to hear your opinion too.

  1. Nic; only two things that need to sort this debate (on cost) for once and for all…..service and segmentation ?

    Got to admire the lad for his optimism…

    Lets just shelve the multitude of key variables that effect cost ! and whats more leave it up to A) Trade bodies (starting to chuckle) and B) the FCA (just pee’d my pants laughing)

    Go speak to APFA about how to loose money quickly, then go speak to the FCA on how to spend other peoples money (oh stop I am on the floor now in a pool of liquid from a slack bladder and tears) it like asking for menu tips from Hannibal Lecter !!!

  2. Nic, in principle there is nothing wrong with what you are saying here providing the implied premise, i.e. that more generic information for clients is a good thing, works in practice. This is essentially the same argument put forward by Paul Lewis a short while ago in these pages. Therein lies the problem. Whether it comes from regulators, journalists or consumer groups, it always sounds good when they proclaim the benefits of more transparency and disclosure in driving down costs and having better informed clients who then use this to compare services and products.

    Unfortunately it doesn’t reflect reality. This is a simple lesson from history. The reason (and I know I’m a broken record on this) is that said regulators, journalists and consumer groups think consumers are like them, i.e. intelligent, interested and have the time to do something about it. If you are lucky you will capture about 10% of the population who meet these criteria using the information and disclosure method. The irony is that there is so much disclosure now (with more on the way through MiFID II and PRIIPS) that it’s having the opposite effect – even intelligent people are put off by the weight of documentation and virtually no one with a life worth living has the time to read it.

    Far from being snarky, a number of people took the time to address what Justin was saying and put forward an argument as to why he was wrong. I think he is misguided if he wants to engage with more than the 10% of the population referred to above or more than a handful of his peers.

    Nic, I don’t doubt your good intentions with regard to disclosure of costs but in the end any suggestions you put forward have to be based in reality. Every attempt by regulators to bring costs down by increasing disclosure, egged on by journalists and consumer groups, has failed. Have you ever asked yourself why?

    Einstein was a smart cookie and worth heeding:

    “Insanity: doing the same thing over and over again and expecting different results”

    “Only two things are infinite, the universe and human stupidity, and I’m not sure about the former”

  3. I responded by placing my fee structure separately on my website under the ‘What we do’ button. I already had my CA online and indicative fees are in there. If Clients are aware of the type and value of their investments, they can work out the probable fees all by themselves. Nothing complicated about it really.

  4. robert milligan 11th May 2017 at 3:15 pm

    nic for the past thirty years I have been receiving as a self employed financial advisor 3% initial and 0.5 on-going, nothing new in that, since 1989 we have had to disclose our remuneration directly to the client, nothing new there, Your friends web-site has nothing new on it apart from disparaging remarks when referring to others, un named and unable to comment, his site is inflammatory, I have said this all along, whilst he is working for himself these fees work, however without Corporate sub-servant costs such as Compliance/Company Cars/ Parking Spaces/ Conventions/ and dare I say it third party Shareholder profits/ such as one Barclays getting 9.35% Initial on LG bonds and SJP well I rest my case!!!

  5. Justin should have submitted his engagement letter in the recent MM competition and then we could have had an insight into his price/value points.

    The sterile debate about price continues.

    Still if you come to MM interactive in London next Thursday we are going to talk about value not price in isolation

  6. Richard Wright 11th May 2017 at 6:10 pm

    Im not surprised at all that Nic thinks Justin is the Bees knees. Two bad peas in an even worse pod !!
    There is no problem with fee’s period – except in the minds of Journalists looking for cheap stories and the Justins of this world looking to point score to feather his own business nest !!!
    We are in a competitive free market place , it is compleatey up to individual companies what and how they charge and if clients feel a companies charges dont offer good value they will go elsewhere, end of!!
    The FCA spent £65k of our money this week on a rubbish logo – questioning their fee is a far better ann interesting story i would suggest

  7. I would never go anywhere that cost me time, money and travel to listen to PL oe DB.

  8. Journalists tempted to respond to adviser’s views with persistently sniping articles should instead think about how they can constructively engage with, and address, the points advisers have given their valuable time to make. Surely that is the best response to criticism.

    Have a good weekend!

  9. We are like children nibbling at a problem so big, we make no difference.
    By and large advisers offer really good value for money, there always someone who will do the job cheaper like Justin, but that’s up to him.
    The real problem has always been how we are regulated ! The product should be regulated not the advice simple. Now we have allowed the FCA to become so large it exists for itself.
    Advice is a movable feast, there is no right answer, cost vary from firm to firm because of overheads.
    In the legal world why is Clifford Chance more expensive than Mead King, bigger overheads and, most importantly they think they are better than Mead King. There is no ground for this other than perception. You are all over regulated yet you do nothing about it other than fight amongst yourselves. Then embark upon a race to the bottom regarding fees. If you think you are the cheapest, it’s probably because you are cheap and your client will one day think you are worthless.

  10. I couldn’t help smiling at this article. 5 years ago, these pages were filled with IFAs saying RDR would put them all out of business and the banks would have total market control. I regularly disagreed, suggesting RDR was the enemy of the banks and, potentially, the friend of the IFA. Many newspapers were quite gleeful at RDR coming in.

    Fast forward 5 years and I’m now reading IFAs have used RDR to increase their fees and what should we do about that?!

    On a similar point, the Telegraph was today moaning that IFAs are refusing to sign off DB transfers for clients who want a Drawdown in retirement…the same newspaper who for years complained about “commission hungry” advisers transferring pensions around!

    Journos should sometimes be careful what they wish for!

  11. Each business has to decide its own strategy that works for its clients. As long as it is clear to clients what the costs are, then that’s a business choice. We are a fee based firm as that works for what we do. Explaining this to clients is easier I think than % upfront – I think we do lose some clients by being so honest about what the costs will be but we gain others who don’t like the % model. Horses for courses.

  12. Nic – nearly every week you demonstrate an alarming ignorance of the market place and how small IFAs work. Nor do you ever make an effort to find out. I assume that you are paid to write this rubbish and will continue to do so since your are not working in the profession. Articles like this and FCA lunacy are driving small IFAs out of business in most cases through despair. The losers are those clients that the FAMR was meant to focus on. And as we pack up, you spout your usual drivel. Even intelligent clients do not know what they need, a conversation my wife was having with a client this morning. As he said, how can I shop around until I know what I need?
    If you want to broaden your understanding, improve your education I am easily contactable but like the FCA I guess we are just collateral damage.

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