If you take everything you read in the press at face value, you will often only see a story from the acutest of angles. Sensationalist headlines, backed up by an edited, out of context quote from an industry commentator or, worse, an unnamed “insider”, combine to paint either the bleakest or most optimistic of pictures.
Anyone interested in how the financial services industry will look after the RDR will know this first hand, with predictions ranging from the review having little or no effect on adviser numbers and business volumes, to more than half the industry shutting up shop and consumer choice being damaged irretrievably.
Similarly, the number of providers in the life insurance sector is depicted as either shrinking faster than Fernando Torres’ market value, with established players like Friends Provident and Axa merging under the Resolution banner and big names such as Aegon pondering their future involvement or it is depicted as prospering, following new entrants such as PruProtect and Fortis.
The fact is that no one really knows how the land will lie after the RDR is implemented, just as no one saw the credit crunch coming, no one would have predicted a Conservative/Lib Dem coalition and no one knew that Bruce Willis was actually a ghost in The Sixth Sense until it was revealed.
Likewise, it remains to be seen which providers stay active in the market, which will merge and which will exit.
What is indisputable is that IFAs and mortgage brokers need to up their game if they are to survive. This point was, somewhat ineloquently, made by LibDem Treasury spokesman Lord Newby who said last week: “The traditional model of the IFA looks to me like a doomed species. I think there will be a drift away from old fashioned financial advice.” This was his cheery prediction, pointing at the changing buying habits of consumers and their demand for free, electronic advice as the reason.
Online advice is an inevitability and anyone who believes otherwise needs to set down their quill pen, turn up their gas light and open their eyes to the 21st century.
However, Newby’s assertion that people will not “want to go through the appalling business of laying out all their details and taking an hour to go through everything” is not just ineloquent, it is wrong.
What online advice is never going to be able to accurately cope with is complex financial planning, as distinct from fairly simple transactional advice. For these situations, a full review of a person’s past, present and future finances is far from a wasted hour – it is fundamental to good advice.
Advisers must not fear the growing volume of direct-to-consumer sales, they must find ways to complement it.
Phil Jeynes is head of new business at LifeQuote, Direct Life and Pension Services