Nic Cicutti: Garry Heath is crying RDR crocodile tears


Last week I received an invitation from Garry Heath, which I was only too happy to accept. Before anyone gets too excited, Garry’s invitation was to join the Libertatem open group on the LinkedIn business website, which keeps people updated on the progress of his trade body.

A few days later, a LinkedIn invitation also informed me that Libertatem’s new website was being launched and, eager to sample the delights of his trade body’s window to the world, I popped over for a quick gander.

Now, as those who know me will be aware, I have long been a keen student of political theories. What has always interested me in particular is the mechanism whereby individuals and groups move from one set of ideas to another.

My own view is there are several inter-related factors at play. The first is there must be a powerful material change, for example losing (or gaining) a job or income. Fear of change can also be a powerful incentive, even when it does not happen.

The second is the requirement for an ideology that offers a justification for both thoughts and future action. In the case of Libertatem the key theoretical underpinning for the trade group, prominent on its website, appears to be the Heath Report Two, a piece of research carried out by Garry himself and published in February.

The central premise of Garry’s report, which seems to be lacking in intellectual rigour, is a bizarre claim that as a direct result of the RDR some 16 million out of the UK’s 23 million people who have previously accessed financial advice are disenfranchised from doing so.

How does Garry arrive at such a number? He says 13,500 advisers, including just under 8,000 from the banks, have left the industry since November 2008, when the RDR was first “announced”. Actually, the initial review was announced in June 2006 and published a year later, in June 2007.

Garry then multiplies the average number of clients an adviser might have had by the numbers who have left. Never mind that many of these “clients” will have been people who came into contact with an adviser a decade or more ago and have no intention of ever darkening his (or her) doorstep again.

Moreover, Garry attributes the fall in numbers solely at the RDR’s door, ignoring other influences over the past eight years.

For example the Cass Consulting report’s suggestion in June 2013 that long before the RDR was implemented “technological advances have been making the creation and delivery of investment products more accessible and cheaper…., whether guided by an adviser or not.”

Back then, Cass’s report found that direct-to-consumer investment platforms held £94bn of investors’ money. By September 2014 this increased to £131.9bn, according to a Platforum report in February 2015. This will almost certainly have risen further in the last nine months.

Nor is this unique: the number of general insurance intermediaries fell sharply, from 7,200 or so to barely 5,000 in the past seven years, caught by the continuing dual squeeze of online insurance sales and web-based comparison sites. Garry’s report also overlooks other explanations, for example the recession five years ago, where falling house prices and a lack of mortgage deals decimated mortgage intermediary numbers.

Likewise, his monorail RDR theory conveniently skates over the issue of retirement and natural wastage: Vision Business Advisers surveyed 600 UK investment advisers in February and found that their average age was 58, with 27 per cent saying they were planning in retiring in the next five years.

The issue, then, is not so much advisers who leave but the industry’s failure to recruit new blood.

Yet none of these factors are considered in Garry’s report. Instead, he weeps crocodile tears for the demise of bank sector advisers. Are these the same people whom Garry disliked so badly that in his old Nfifa days he even set up a short-lived campaign – BankWatch – to focus on their nefarious activities?

Again, Garry ignores huge structural factors – like the banking crisis – that decimated the banks’ advice businesses.

This discounting of arguments that do not tally with his world view carries over into a related memory loss problem. Three years ago, Garry argued the RDR’s implementation should be delayed, quoting one survey to show only 5 per cent of IFAs had achieved their Level 4 qualifications.

Strangely enough, the increased professionalism of advisers thanks to the qualifications they have obtained is now mentioned approvingly on Libertatem’s website.

The truth is Garry has always had an arms length relationship with facts, using those that suit him and disregarding those that do not. To a greater or lesser degree all of us are guilty of much the same thing at times: a bit of exaggeration here and some hyperbole there, nothing much wrong with that, is there?

The difference is Garry’s report is being used as the prospective intellectual recruiting sergeant for a new adviser trade body.

Advisers preparing to gird their loins and go into battle with Libertatem need to know their leader’s thoughts on such critical issues are based on considered opinion, using careful thorough and reasoned logic, verifiable evidence and valid scientific methodology.

The Heath Report Two is most definitely not that kind of document.

Nic Cicutti can be contacted at