So are we standing on the edge of the abyss or about to take a huge leap forward for the financial planning profession?
It will be difficult to make any reasoned assessment until at least July. There will inevitably be casualties and huge success stories and for many the time now is to align with those that can best help them be part of the success story.
There is rightly great dissatisfaction with the final set of regulations that have been presented, particularly given the original intentions of the Review. Consumers will not easily be able to differentiate between independent and restricted advisers. Also, while advisers will have more professional qualifications, consumers will not be able to find so many.
No sensible solution has been found for the people in the middle and the regulations need to change to enable this to happen. We need to see greater innovation and more positive energy from the sector to deliver the great value associated with financial planning and ensure a stronger engagement with the consumer.
For all the talk about proposition and RDR-readiness, there remains a fear that many advisers, despite being qualified to level 4 and above, have not developed the skills to present a financial planning proposition and service that clients are actually going to pay for.
The IFP’s focus for 2013 is on assisting advisers to gain the confidence to deliver an effective financial planning service. In doing so, they can not only fully justify the fees they charge but have an expectation of a higher proportion of the client’s assets or business too. This is going to be vital for many to be able to survive and thrive.
Robert Reid wrote about this same subject in last week’s Money Marketing. The role of the paraplanner is vital but somebody still needs to find and connect with the client and convince them to take action.
We should not be enforcing level 6 at this stage. For many it is a natural step as part of their professional development, but quality and relevance of learning is far more important. Too many firms are identifying that they have technically very knowledgeable people who can’t sell or connect effectively with their clients. Some still can’t find clients unless they come to the door. This has to change, otherwise there will be a quick and painful end for many.
In becoming better at our jobs we need to understand more about the impact of behavioural economics and what drives behaviour so that we can work with clients to create strategies and solutions which are powerful and rewarding. This will lead to more referrals and more business. Dealing with the whole of a client’s situation and family has to be better than talking about a bit of it unless of course you are a genuine specialist in that particular area.
It’s important to ensure that financial planning remains an exciting profession to join and that we can create the capacity to train and support new people. The FCA suggests it wants to properly understand the sector; in 2013 we must ensure that it does and that regulation can better represent this dynamic and client focused sector.
Nick Cann is chief executive of the Institute of Financial Planning