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OUTSIDE EDGE

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&#39s recent consultative document may be

somewhat over the top but could also prove to be the spur we need to prove

him wrong.

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

all circumstances.

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

costly.

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

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