One of the things I have learned in the years I have been writing this column is that, regardless of what is said, positive or negative, there will always be a variety of hostile responses.
I do not have any problems with that – it comes with the territory. Either way, this week I thought I would try to say something vaguely hopeful about the kind of debates over the retail distribution review that have been developing in the paper and on the website in recent months.
First, it is worth reminding ourselves of the tone of the debates a couple of years ago. If anyone said anything in support of the RDR back then, they were guaranteed to be shouted down.
Objections were focused primarily on two issues – obtaining the appropriate qualifications needed to practise after December 2012 and the change from commission-based remuneration to fees.
For a long time, my email inbox and the comments published below my columns were full of vitriol about the RDR’s iniquities, about how IFAs were facing devastation and how so many of them would leave the industry in January 2013.
All sorts of desperate attempts to see off the RDR were suggested and put into effect, including extensive lobbying of MPs on the Treasury select committee. Organisations seen as soft on the issue, such as Aifa, were routinely derided.
None of those plans was successful. The TSC did call for a 12-month delay to the introduction of the RDR in July last year but the FSA completely ignored its findings. Indeed, it rushed out a pre-prepared press release dismissing the committee’s report within hours of its publication.
The inevitability of the RDR’s introduction in nine months’ time has engendered a completely different mindset among advisers
At the time, I thought the FSA’s response was somewhat arrogant and potentially dangerous in that it risked the ire of TSC chairman Andrew Tyrie, a man who has taken his committee’s work much more seriously than some were prepared to give him credit for.
In hindsight, it seems clear the regulator’s response was designed, at least in part, to spell out a tough message to the financial services industry – if you are hoping for a reprieve in the implementation of the RDR, you can forget it. Once that message became clear, the rebellion against the RDR grew more and more muted.
One example springs to mind. Last November, Money Marketing reported that an enterprising IFA had launched an e-petition against the RDR, hoping to garner the 100,000 votes necessary to force a debate on the issue in Parliament.
The petition had raised 675 signatures at the last count, although my reference to it will doubtless add another half a dozen names to the sorry list.
More significantly, IFAs who were formerly adamant they would leave the profession if they were forced to obtain higher qualifications are now hard at study. Almost all will be qualified in time for the RDR, or shortly thereafter.
The discussion has shifted from the outright rejection of the RDR and even the commission issue to something completely different. Moving from fully independent to restricted advice is now talked about not so much in terms of being inadequate to cope with a different remuneration strategy but in terms of what kind of advice IFAs will be giving that best suits the needs of their existing and future clients.
Look at the responses to Martin Bamford’s recent article, in which he discusses the issue. He wrote in Money Marketing: “I suspect the decision for individual firms will be driven by a variety of considerations. What is best for the client will hopefully be the dominant factor – it should be the main consideration.” Most people agreed with him.
The IFP’s Nick Cann wrote: “There are a number of questions businesses should now be asking themselves ahead of deadline day and these should be asked with some emotional detachment and an element of pragmatism.
“Surveys suggest most intend or expect to stay independent in 2013 but there are some things to consider. Also, it pays to start with the client, which is still unusual for many in financial services.”
Nick argues that while these are personal decisions, they should be determined by the needs of clients, not the remuneration requirements of their advisers.
Again, while some of the responses to his article suggest people believe their clients will not mind either way, IFA Gill Cardy makes the valid point that to opt for restricted advice means that once you go down that route, you will never be able to advise clients who would have preferred the alternative.
In each case, the replies and the quality of the debate has clearly changed from the ranting that was so common 12 months ago. It is as if the inevitability of the RDR’s introduction in nine months’ time has engendered a completely different mindset among advisers.
I regard this as broadly positive. It means advisers are quietly adjusting to realities they would not previously have considered back then and, dare I say it, are on the way to becoming stronger and better-rounded IFAs as a result. Even so, I am not expecting any kind words in reply – do your worst.
Nic Cicutti can be contacted at firstname.lastname@example.org