View more on these topics

Nic Cicutti: Wheatley’s glib ‘sitting on hands’ remarks miss the point

Mutual mistrust means advice firms end up waiting for the FCA’s next brainwave before taking action

Cicutti-Nic-2014-MM-700.jpg

Every now and then, when trying to make a point in a column, I find myself quoting from a book I have read, or a film I have watched.

Ironically, there is a verse I have often gone back to in recent years from an author – Theo Geisel – whom I never had the opportunity to read as a child.

Geisel, better known to millions as Dr Seuss, was famous for his simple rhymes and stories, coupled with fantastic illustrations.

One of the rhymes reads: “How did it get so late so soon? It’s night before it’s afternoon. December is here before it’s June. My goodness how the time has flewn. How did it get so late so soon?”

A friend gave me a card with those words a few years ago, after listening to me whinge about never having the time to do anything because I was so immersed in the relentless grind of my work.

Sadly, the card is one of many items that went up in smoke during our house fire a few months ago. But the words are widely available on the internet.

For any adviser who finds himself chasing his or her tail day after day – meeting clients, carrying out research, sending off bills, dealing with endless screeds of paperwork, not to mention all sorts of regulatory requirements in the process – Dr Seuss’s little ditty will ring a few bells.

It came back to me last week after reading in Money Marketing that FCA chief executive Martin Wheatley was saying advice firms have been “sitting on their hands” since the RDR, instead of coming up with ideas to close the advice gap.

Wheatley’s words must have felt like a kick in the teeth to advisers. To be told you are “sitting on your hands” feels a gratuitous insult.

Even worse, Wheatley probably did not script those words himself: anyone who earns more money in a year than most working men or women do in a lifetime doesn’t “do” speech writing. You get a minion to write it, then check the speech over – or maybe, if you are important enough, another flunkey does that for you too.

Having penned my fair share of corporate speeches for others over the years, my guess is the flunkey probably thought “sitting on your hands” would act as a little “livener”, something to make the audience sit up and take notice.

Wheatley, or other FCA subordinates who went over the first draft, clearly agreed.

The speech was delivered knowing the effect it would cause. Wheatley and his gofers will probably have been hugging themselves with glee at the trade press’s reports – and the angry response of advisers to the speech in the comments.

The irony is there is a smidgeon of truth in Wheatley’s statement. It is true that in the absence of a commercially viable simplified advice option, “rather than innovating themselves to create a replacement, too many advice firms have been ‘waiting for the next step’ to be laid out for them”.

But a large part of that problem lies in a dynamic involving two decades of stunted co-dependency and mutual mistrust between watchdog and industry, in which repeated failures to regulate effectively lead to misselling scandals, belated crackdowns and new, supposedly improved rule-setting.

No wonder, then, that the response of much of the industry is to wait for the FCA’s latest brainwave to be published – followed by successive interpretations of how that brainwave should be applied in practice – before tentatively trying to put it into practice.

As for Wheatley’s view, which incidentally I agree with, that “automated advice” will one day be a key part of any solution to the so-called advice gap, this is not an area advisers are likely to be able to afford to develop themselves.

Creating a viable online advice system – easy to understand and use, accurate, credible, fast, cheap or at least economically worthwhile for consumers – is feasible, without a shadow of doubt.

I am sure there are many out there putting the building blocks of such a system together right now. But the reality is it costs a small fortune to do it. And it is also technically demanding.

Apart from anything, were it that simple you can bet your bottom dollar firms like Hargreaves Lansdown, a large network, or even a fund group like Fidelity would have rolled something out by now.

Advisers themselves have neither pockets that are deep enough, nor the time to do it themselves. 

For them, the way forward will either be to licence such a system from one of the big providers or, if they can stomach it, tie up with a network in return for a slice of their earnings.

Advisers do need to modernise. They need to think through their strategic options with respect to marketing, to pricing strategies, service, technology and a host of other issues.

The trouble is, for many advisers time flies so fast it is often “night before it’s afternoon”.

Which is why for Wheatley to talk glibly about Project Innovate and people “sitting on their hands” is to miss the point.

A cheap headline is one thing. Assisting advisers to become what you want them to be is another: it involves fewer slurs, and more genuine dialogue and engagement.

Nic Cicutti can be contacted a nic@inspiredmoney.co.uk

Recommended

Peter-LeBeau-MM-Peach-700.jpg

‘Seven Families’ income protection campaign hits £300k funding target

The Income Protection Task Force has confirmed today it is has received the £300,000 in funding needed to go ahead with the “Seven Families” project. In total, 17 companies have committed to the initiative thus far, which should now launch as scheduled in September. The IPTF hopes the campaign will increase awareness and take-up of […]

FCA-FSA-Building-Sky-Contrast-700x450jpg
7

FCA sets aside £1.7m for inquiry into closed book probe

The FCA has set aside £1.7m to carry out an inquiry into how it announced an investigation into closed book policies which sent insurers’ share prices tumbling back in March. The Daily Telegraph reported in March that the FCA was set to force insurers to review exit charges on all their legacy policies as part […]

Aegon-Logo-Building-2012-700x450.jpg

Wells Street Journal: Where’ve they Aegon?

A thought experiment: You are in charge of pensions and communications at an insurer. Plans are afoot for a big reveal. If it goes well, it could bring in thousands of new customers. Would you a) want technical experts on hand to explain/spin it to journalists or b) send all your boffins on an office […]

Guide cover resized

Guide: Johnson Fleming’s managed auto-enrolment service for SMEs

Johnson Fleming has launched its new managed auto-enrolment service, designed to support SME businesses of up to 250 employees. The managed auto-enrolment service is not just about providing businesses with a software system for them to manage themselves, but more about outsourcing the administration of the project and scheme to Johnson Fleming’s auto-enrolment staff.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. One thing you do have to consider Nic is; the FCA has long stopped being a regulator and turned into an enforcer (an all consuming sales manager, if you will) we have a rulebook that stands 8ft tall (I am led to believe) every aspect of what we can do as individuals and as a business is dictated !

    We have a responsibility to put our clients at the heart of what we do (which I whole heartedly agree with) which is a moral stance not editorial ?

    So I would say to you; we have our hands tied behind our back, rather that sitting on them, anyone who peels away from a process driven, tick box and anal book keeping, driven rulebook needs to ensure all is compliant with that for a start (a forlorn hope, me thinks)

    If ? and I mean a big if ? you do get past this, you then have to consider FOS !!!! oh dear my head has just fallen off !!!

  2. Mr Wheatley conveniently and casually overlooks the fact that the people out here who are actually advising clients to the honest best of their abilities have to do so in the face of a relentless blizzard of regulations that his minions seem to consider to be their very raison d’etre to devise, ad infinitum. Not a passing thought is given to whether all these new processes and endless embellishments to those already extant are actually necessary, wanted (by clients ~ most of mine tell me that, for the most part part, they certainly aren’t), viable (in terms of what they cost to follow ~ so who pays?) or actually of any reasonable or practical value. They’re just regulations and processes for their own self-serving sake, often couched in terms that amount to little more than woolly “guidance”.

    And yet, as usual, in the face of all this, the regulator has the bare-faced arrogance to blame US for a lack of innovation and accuses US of sitting on our hands. Will the FCA ever accept responsibility for any of the problems ~ not least the advice gap ~ which its own policies have created? How about the regulator getting its own house in order? How about (just for starters):-

    1. cutting costs,

    2. cutting red tape,

    3. simplifying its RMA reporting requirements (the FCA still hasn’t explained just what it actually does with all this data or what practical purpose it serves) and generally

    4. cutting the excessive burdens of compliance which have spawned yet another layer of expense in the form of an entire sub-industry of consultants?

    It’s the same old, age-old problem ~ lack of accountability, so the regulator remains entirely free to set and pursue its own agendas without having to justify them to anyone or any body but itself. In the mind of the regulator, everything and anything can be justified to the wider world under its decidedly tattered old flag of consumer protection. Yet the list of examples of how the FSA/FCA has manifestly failed in this regard is long indeed. It’s always somebody else’s fault, somebody else’s responsibility, somebody else’s failure, so everyone else must pay to clean up the mess. Never the regulator.

    I predict that the FCA’s latest talk of simplified advice will come to nothing of any real value, for the fundamental reason that the FCA itself is constitutionally incapable of devising any sort of framework within which anyone is able to do anything simply.

  3. Having read the speech (which is freely available from the FCA website), there is no mention of the above quote. In fact the speech is generally supportive whilst recognising the challenges the market faces. When referring to advice, Martin does not single out ‘advisers’ and talks about the industry as a whole. Can anyone provide any insight into the infamous quote?

  4. Hi Matthew,

    The “sitting on hands” line was off script – our reporter Steve Tolley attended the event.

    The ad verbatim quote is: “The reason we launched project innovate is that we have been very concerned that part in the advice sector there hasn’t been enough innovation since we launched the RDR, there has been a lot of people sitting on their hands waiting for the next step.”

    Best

    Tom

  5. Matthew: That is a very interesting point. The speech published on the FCA’s website isn’t a transcript, it was his draft, and what Martin Wheatley actually said clearly differed. I don’t know if he was reading from a teleprompter and went ad lib, or whether the speech was made from memory. I’m not 100% sure at which part of his speech he made the infamous comment, but my best guess is here:

    Draft: “One area I’d include here as a priority, automated advice, where we’ve seen some significant leaps forward in related technology over the decades. [Some blah about the AI Winter and Kasparov v Deep Blue follows] And today, once again, we’re having our expectations raised.

    An important question: what, if anything, does all this mean for dispensing investment advice in the years to come? And can it be automated to deliver returns and security for consumers with straightforward needs? Tackling the so-called ‘advice gap’ between those with large investments pots, who are willing to pay for financial support, and those with smaller investments, who might be more reluctant to put a value on advice.” [and so on]

    Now the actual speech according to MM: “One area I would include here as a priority is automated advice where we have seen some leaps forward in related tech over the decades but frankly not enough. The reason we launched Project Innovate is we have been very concerned that particularly in the advice sector there has not been enough innovation since we launched the RDR, and there has been a lot of people sitting on their hands waiting for the next step.

    One question is does dispensing advice always have to come with the high price tag it has? Or, in order to democratise it and get it to a wider community do we need to use different models? Not completely replacing the face-to-face model as I think we need both, but how far can we automate and deliver the returns that customers need in a safe and cost effective way, and how far can we tackle the advice gap that seems to exist for people below the threshold that IFAs want to spend the time on.”

    You can see the content is similar, but it would be interesting to know why Martin Wheatley decided to alter the tone of his speech so that it was much more aggressive towards IFAs. It’s not just the “sitting on the hands” comment, there’s also the fact that in the final line the responsibility for the advice gap is shifted from consumers who “are reluctant to put a value on advice” to the IFAs who “don’t want to spend time on them”. (The use of the words “don’t want” rather than “aren’t able to” implies that the IFAs are failing in some sort of social duty.)

  6. Christopher Petrie 19th June 2014 at 1:02 pm

    As it’s now clear the comment wasn’t in the script, it renders the entire first half of Mr Cicutti’s blog complete and utter twaddle! No “minion” wrote that phrase for him. You might have thought the journo would have read the speech from the FCA website first?

  7. Tom, your previous article on this states that ‘advisers’ were sitting on thier hands not ‘people’?

  8. Matthew – ‘part’ in quotes I posted should read ‘particularly’, so Wheatley clearly identified advisers as being the ones he felt had been “sitting on their hands” post-RDR.

    Hope that helps.

    Tom

  9. Nic

    The problem is not that IFAs do not want to develop systems, it is the fact that the regulator is so inconsistent in their approach. A good example would be the fact that they turn a blind eye to marketing firms and online journalistic advice sites offering guidance or advice whilst heavily monitoring adviser regulated websites with complicated marketing rules and indeed sales rules.

    This is not an excuse this is an observation and you only have to look at the disclaimer at the bottom of Money Saving Expert’s homepage to see the double standard:

    “Important! How this site works
    We think it’s important you understand the strengths and limitations of the site. We’re a journalistic website and aim to provide the best MoneySaving guides, tips, tools and techniques, but can’t guarantee to be perfect, so do note you use the information at your own risk and we can’t accept liability if things go wrong.
    • This info does not constitute financial advice, always do your own research on top to ensure it’s right for your specific circumstances and remember we focus on rates not service.
    • We don’t as a general policy investigate the solvency of companies mentioned (how likely they are to go bust), but there is a risk any company can struggle and it’s rarely made public until it’s too late (see the section 75 guide for protection tips).
    • We often link to other websites, but we can’t be responsible for their content.
    • Always remember anyone can post on the MSE forums, so it can be very different from our opinion.
    MoneySavingExpert.com is part of the MoneySupermarket Group, but is entirely editorially independent. Its stance of putting consumers first is protected and enshrined in the legally-binding MSE Editorial Code.” (MoneySavingExpert.com)
    Can you imagine any IFA or advisory firm having wording like this on a regulated website? I suspect the regulator would soon ask us to correct any errors and pay any compensation to clients that may have acted on the advice.

    Is this the new world of simplified advice or guidance? If so God help us! As I suspect it will be us regulated financial advisers who pick up the bill for the mis-selling and potentially inaccurate information.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com