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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



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There are 23 comments at the moment, we would love to hear your opinion too.

  1. Funny thing Nic, advisers have been pulling apart the FSA’s threadbare mathematics which underpinned the RDR.

    The use of historic data where it suited, the avoidance of other data which contradicted their preferred route.

    The use of certain parts of the Charles River reports and the ignoring of other aspects of the same Charles River reports when it did not serve their purpose.

    Let’s be clear – regardless of the actual figures the RDR has disenfranchised millions of consumers by removing thousands of advisers and by banning the commission mechanism which allowed them to spread the cost of the advice.

    To consider this anything other than a criminal waste of resources and a misuse of powers is risible.

  2. I don’t understand what this rant is really all about ? I have read this twice now and all I can make of it, is criticism of some-one daring to do or be something different (hardly a crime is it ?)
    As for having a go at said reports, we all know any report is fundamentally flawed in any case based on the answers you want !

    Its like Camelot asking 200 people if they want to millionaires by the end of the year, to justify the lottery

    There is another theory of this of course, have you had a nice fat brown envelope from Chris this morning Nic ?

  3. According to the BBC website today, scientists have finally discovered the true appearance of a tiny sea creature – Hallucigenia. All previous fossils appeared to be without heads, similar to chickens, but a new study suggests they had an endearing little smile on their faces. These creatures used to be in great abundance but apparently died out 500 million years ago.

    • Take The High Road 25th June 2015 at 5:16 pm

      Ha, Ha Neil…as someone once described Richie Benaud, that’s about as dry as an Indian test match wicket!! All the best to you and all at SG Wealth

  4. Thanks for calling my attention to the website. It is well set out with the important points that need to be made. I will be applying for membership.

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

    Is it the industry’s failure or the fact that any sane young person looking at the kicking advisers get in the popular, if wholly lacking in the ability to back anything up, press would think no thanks?

    • I am glad to say that there are you some young people out their insane enough to join me in the FS industry. I make less money in the short term as a result, but at least there is a future for them ad my clients when or if I retire before dropping dead.

  6. In fairness, some valid points made in the piece.
    This said, The Platforum is not an organisation devoid of academic rigour and, back in 2013, it put the figure for UK consumer engagement with financial advisers at something approaching ten million: “The number of consumers in the UK with a risk-based investment of some sort is 13.7 million …… with a total of 9.4m investors using advisers to some extent”. Whatever the precise figure may be, the current number of financial advisers could not cope with that potential demand ratio.

  7. Open comment: getting tired of reading output from non-practicing, non-regulated journalists who consider themselves experts for comment by being on the fringes of the profession for a long period of time…so I’ll take my own advice and stop reading them, I think!…

  8. Dominic Thomas 25th June 2015 at 4:11 pm

    I think like most advisers, I am concerned about the unwelcome and unpredictable rising costs of regulation and paying for the mistakes of others, whilst aware of greater complexity and increasing “risks” and a litigious culture. I admire Mr Heath’s attempt to address this issue, but I remain unconvinced that he is making the right argument.

    I have to agree with Nic’s points – the numbers look spurious to say the least. Mr Heath appears to think the past was a good place, even complaining that somehow regulation in 1980 was better. Really? Our industry has to adapt to the changes of society and technology and it all feels rather like someone making an argument to keep the horse and cart on the M1. Constantly harping back to the past makes you look very out of touch… unless you still think there is a commercial viability in the door to door man from the Pru..

    The argument about sunset is the wrong one. Why should investors pay for nothing? If they are getting some form of service, then charge for it… whats the problem? It would appear that the delusions about free advice from old commission models have evolved into belief. There will always be people that don’t want to pay. These are precisely the people that no adviser should work with, they want something for nothing and will complain even when they get it. Most people are reasonable, you pay for your car, house, utilities each year because you know these are basic things you “need” in life (ok – our society). Like every business, you have operating costs and profit, price services for your market or perish. If you cannot sell the value of what you do, you are in the wrong business.

    • Agreed, I agreed for a delay of RDR rather than against it. I was ready and my business has flourished as a result. Move on…. the RDR happened over 2years ago, focus on what improvements are needed, don’t look for a time machine to time the clock back.

  9. Pot calling kettle black comes to mind lol

    I’m so glad that there was a disclaimer in this article:

    “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 fact is the FSA and the FCA have done little to attract new talented advisers into the profession and now we face a massive skills shortage at a time when advisers are needed to deal with pension freedom. Instead of supporting the adviser community we find that the regulator and indeed the government are trying to undermine the profession by allowing more and more unauthorised activity to take place.

    Not once in any of your articles Nic have I seen you write about the many benefits of clients seeing professional financial advisers, instead you often use reports or indeed innuendo to suggest that advisers are only there to rip off the consumer. There are good and bad advisers but in my opinion most advisers are here to try and do a good job for their clients and often people in influence like yourself betray our trade as money grabbing leeches who do not disclose fees and don’t add any benefit. Of course there has been an increase in online use of platforms and indeed online banking it doesn’t necessarily mean that the advice gap has disappeared in fact with the decline in the number of financial advisers, I would argue that that gap has become a massive chasm particularly with pension freedom.

    I would also argue that it is only time before we start to see significant complaint numbers about online providers a good example of this is the recent review into general insurance comparison tools. I also wonder how long it’s going to be before people start complaining about content on websites that are linked to buy buttons even if they are execution only sites!

    I like many would like to see government give greater support to companies who are willing to train advisers and inject new blood into the profession, but we cannot do that if we constantly have a stream of media articles seeming to indicate that all advisers on money grabbing leeches. Yours and Paul Lewis’s articles often read like that without any real understanding of the business costs the IFA’s have particularly when taking into consideration the long term liabilities that we are all building up.

    Maybe journalists should be held responsible for their articles 20 years later!

    Would agree with Simon Cox comment also getting fed up of your comment can Money Marketing find someone else to comment.

    • @Peter, I disagree with much Nice says and agree with a lot you say. Nice is much like my father was when a Fireman and Union Rep…. “a social handgrenade” ….. pull the pin, count, throw, watch where it falls in case it fails to go off and then duck and wait for the explosion….

  10. Richard Wright 25th June 2015 at 7:04 pm

    “The truth is Garry has always had an arms length Relationship with facts” Goodness gracious you really do have a nearve Nic – pot , kettle, black !!!

  11. Nick to use a Northern expression you are a gob-shite. Weakest link goodbye.

  12. @Philip Dodd – Are you the very same from Prestbury?

    Anyway, thank you for that comment. I have been saying much the same for years. I get so weary of this nonsense bleating about the ‘disenfranchised’. Why push against a closed door when there is a much nicer (and more profitable) door – wide open?

    As for Gary – bless. He suffers from the same fault as most of us. He doesn’t change. In his case another Don Quixote of Financial Services, fighting battles that have long since passed into history.

    Oh and wile I’m at it – the name! My dentures catch fire every time I attempt to say it! Catchy it ain’t.

  13. IMO, RDR Tries to address the wrong issue. Many of the advice issues I come across are not due to lack of technical knowledge. A wider problem seems to be that the advice is either not adequately explained or is not suitable for fairly obvious reasons.

    For example, not being aware of vulnerable customers, selling high risk investments to inexperienced customers, selling long term investments to the elderly etc.

    One option could be different requirements for tied as opposed to IFA.

  14. I was travelling yesterday so missed all this excitement. Thanks to those who did comment. The progressive metropolitan elite always hate having counter arguments put to them and demonises anyone who tries. Nic’s article is full of straw man arguments and nit picking. Forgive me for not spending the next 3 hours unpicking it

    The Heath Report was and is about the availability of advice not its quality. The Banks claimed 7m customers for their advice. For the vast majority no longer have that access and the banks have sacked their advisers – fact. Am I happy that the banks no longer give their target based advice sure but there is nothing to replace it as yet and that is not good for the consumer.

    The IFA sector serviced 12m consumer according to the ABI and 16m according to Gfk. Yes Nic not all of these people had an intimate relationship with their adviser but they had a number to call if needed. Now many will ring a number that doesn’t answer.

    Adviser numbers come from IMAS who get them from the FCA. In some ways the only true new figure is the number of clients per adviser. This was our survey written and collated by Action Consulting. It shows that the existing advisers have dropped their average client numbers from 405 per adviser to 195 . Multiply that by the adviser left and you have your sector capacity

    Nic isn’t the only one who likes to muddle the facts. Last Autumn Martin Wheatley appeared in front of the TSC and was asked questions about adviser numbers and the availability of the advice. He claimed “not to recognise the figures” proffered – bizarre that as the figures used were his published in a Money Marketing Article earlier in the year.

    Unlike Nic, who appears happy for people to lose their employment as long as the metropolitan elite can continue to polish their prejudices. I prefer a world where the clients decide what they want, how often they want it and how they pay for it. Where advisers choose what type of client they want and are free to run their businesses honestly and correctly. Both free from a self appointed, self serving elite who believes they know more than those who have the experience.

    Is this view old fashioned? – sure. It is going to be the future – sure. It has to be – we cannot survive long term as we are.

  15. Garry, there is a significant argument that the 7m people you quote being orphaned by the banks should never have been given investment advice in the first place, they had a few grand in savings and were forced into investing in equity based funds!

    You say you want a world where clients decide what they want and how they pay for it, what in the current world does not allow this? Is it just the loss of Commission and trail youre referencing here? The illusion of free advice?

  16. The article has wider implications as society continually tries to nanny us and shoehorn us into convenient boxes.

    Some advisers like dear Harry Katz speak about what is best for them, others consider what is best for society and try to influence how society can best meet the perils of longer living, lower pensions, etc, crazier regulation, etc

  17. Sigh. Given the resources available (and in comparison with those available to the Financial Catastrophe Authority – and I must point out funded by coercion on us and paid for by our clients) the quality of data and analysis in the Heath Report is pretty good. And it has succeeded in its primary purpose of getting the knowledge of the catastrophic failure that is the RDR out there a bit more.

    Whatever the numbers – and I accept that more work is needed – evidence for the ‘need’ for RDR was largely concocted by the FSA/FCA to suit its prejudices. The problem is for those that were opposed to it was that we needed at least the equivalent funding as that spent by the FSA in constructing it. Since the FSA funded it by wealth taken from us and our clients it would need equivalent sums again taken from that same wealth to rebut it. Such tactics are the hallmark of all out of control and self interested functionaries, everywhere.

    At the heart of this is the fact that no society in history has ever survived this level of bureaucratic interference and bad money. It is about time that ‘regulationism’ was thoroughly challenged and if the Heath Report and Libertatem can trigger that it will be a success.

    I declare an interest. I am one of the foundation committee members of Libertatem. Oh, and I rarely bother to post comments on Cicutti’s journalism. Arguing with idiots just drags you down to their level. His grasp of the numbers may or may not help the debate but his grasp of the politics and economics is woeful.

    Mind you, as click bait for MM he may be worth his pay.

  18. The F-pack& Govt have a lot to answer for, but we and our professional bodies are not blameless.

    If we want to have a future, we have to build one and that includes the foundations.

    New entrants can be brought on, but it is time consuming and not always profitable, especially in the short term.

    There are grants for taking on apprentices, which vary according to their age and ironically it is better to take on a school leaver rather than a graduate.

    The apprentice hourly rate is VERY low as it should be to make it attractive an employer to take on and train an apprentice as it is like being paid to go to get a degree.

    The CII/PFS should be encouraging firms to take on apprentices and incentivising firms. They are NOT. The only national provider for the apprenticeships is Bromley College and at one point they had one assessor who lived near me I think covering pretty much the whole of England.

    People like Paul and Richard Etheridge share their knowledge and experience and as they should charge a nominal fee for their courses. My apprentice Ryan has just returned from 2 days of training on a combination of Truth software and how a paraplanner can support an adviser (hosted by Richard Etheridge). Ryan is just starting to cover his costs a year and a half after joining my firm. During that time he has qualified as a mortgage and protection adviser (despite the fact we don’t do mortgages), sat and passed ER1 and R01, didn’t pass R04 by one mark but now knows enough about pensions to be a useful asset. Within the year, his pay went from the apprenticeship rate which is pitifall to a half decent rate of basic pay and his benefits from us as a small firm will increase again as from 2 weeks time when he gets access to a pool car (not a company car and electric rather than petrol).

    There is a bright future for those already in the FS industry and those joining it as the glass is half full with potential to fill up more.

    Once Ryan reaches level 4, even if he doesn’t start advising and remains focused on supporting the advice I give my clients, we will consider taking on another new apprentice and once again, probably not a graduate with a degree in basket weaving.

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