As we move towards the most important six months since the term IFA was
coined, the news that many companies have plans to recruit on a scale not
witnessed before could be seen as strange.
For many years, those who herald their plans with such confidence have
rarely delivered anything of any substance.
We currently have a market where the size of the company is all too often
in inverse proportion to the level of independence it practises where
product selection is concerned. The moves currently being made by the
providers confirm that it is the bigger firms which will lose the least
from the move to multi-ties.
Inevitably, we will see a smaller IFA sector but this may be the best way
to build a profession through the development of new recruits as opp-osed
to the conversion of the current population, many of which are unwilling to
embrace a new business model.
The IFA who will prosper is the one who develops his or her investment
knowledge and investment management capabilities going forward. With this
in mind, the comments in Sandler's recent consultative document may be
somewhat over the top but could also prove to be the spur we need to prove
What we need to do now is to bring this to reality by setting in motion a
programme of personal development.
I recently spoke at a conference on income drawdown where the topic of
permitted activity for this product was debated.
I suggested that simply ringfencing a product could have a disastrous
effect where those not authorised simply defaulted to annuity purchase in
If we are to regulate by means of permitted activity, then we need to do
so by having a specialism such as “planning in retirement”. This would
encompass all the options and not just drawdown.
If the FSA adopts this app-roach, then, for consistency, the pension
transfer permitted activity should be amended to cover all and not just
occupational pension scheme transfers.
This generic approach avoids products such as the new types of annuities
falling through the net, especially where they are becoming just as complex
as drawdown, with their investment options needing a full understanding
bef-ore they are put into effect.
The theme running thr-ough all this is one of investment expertise and
this is the commodity that the public will pay for ahead of all other
facets of advice save tax reduction.
As Sandler asked, can adv-ice be sold separately from a product? Well, I
believe the answer is yes but to do so we need to be truly independent and
not just by means of a badge but also in the way that we practise our trade.
As the IFA sector becomes service-led and not product-led, many firms will
opt for the perceived safety of the multi-tied sector.
In doing so, the product floggers may find that multi-ties will not be the
panacea they seek, especially when Catmarks are inevitably ext-ended to all
products without exception.
It is also interesting to note that some of the banks have seen wealth
management as simply another product in their range and not the service
that it needs to be.
If it is to be successful in the long term, that faulty vision could prove
Returning to the mixed message I referred to earlier, just where are all
these 100, 200 and, even more bizarrely, 800 IFAs going to come from?
Or perhaps the IFA sector is to lobby for cloning on a wide scale. This
could certainly shorten the training cycle but could be frustrated by the
likes of BMW who may not be able to keep up with the replication of the
clones and their automotive preferences.
Robert Reid is principal of Syndaxi Financial Planning