But those bancassurers and the like who prefer to multi-tie for the money and pretend that they should still be called financial advisers (as opposed to, say, product sellers) have all the artillery. Neither the FSA, nor the Treasury has ever been able to withstand their assault and flattery. The war is not over at all. Amanda has just shot the Archduke.
It will be over by Christmas if the FSA’s schedule is followed but if good advice is to triumph over craftily concealed sales, the multitude of decent independent advisers needs to rally swiftly behind the key principles of RDR2 and ensure that it is consumer clarity that remains its key issue, not the commercial needs of those trying to profit on a grand scale from financial services.
The key argument of the latter will be that without their scale and clout, the huge gaps between what consumers should have in responsible savings and protection and what they do have will never close. In reality, though, the gaps will only close when all can trust financial services retailers because they understand the angle that the retailer is coming from. What we do is too important, which is why we need the very clear lines between advice and sales that RDR2 proposes.
Organisations tend to focus less on their clients’ needs and more on their own as they grow. Big business and the Government spend billions on consultants trying to correct this natural tendency.
But in RDR2, one quite big institution has bucked the trend because they listened to those who were closest to consumers rather than those who lobbyists were paid the most. It may be that those others were caught silent because they knew that the complexities and confusion in RDR1 would allow more profit from more confused customers. Perhaps they sat back complacently but they will not be sitting now. They will be marching on Whitehall in double-quick time.
Their attempts to change things back to where advice and sales are indistinguishable in consumers’ minds will be greatly encouraged if there are splits in the advisory church. The RDR team wisely spotted that the clearest litmus test for advice is the whole of market test, not the remuneration test. But those who claim to be purely fee-based and who clamour for more purity should perhaps explain exactly how their fees work and, if not time-based, how they differ from a commission in their possible effects on how advisers treat consumers.
A technical point indeed so to put it more clearly: “Use the word fee as you will in marketing but in regulatory debate it must surely mean a price for time spent and work actually done.” Using that test, I am not sure one can find one successful fee-only distributor of scale growing in the wider market.
So this column will do for the rest of the RDR fight as its predecessor successfully did in the Icob one. It will parade clear answers to the FSA’s key questions and also line up the arguments of the profit before customer set and shoot them down one by one. Let’s see if it and all those other real IFAs who bother to explain their views to the RDR team can win these most serious battles. We have but a slim chance but those are the best fights to win.
Tom Baigrie is managing director at Baigrie Davies Lifesearch