I recall reading that all events have a purpose and not necessarily the most obvious one at that. I say this having returned recently from a family trip to Washington DC. Flying out from Heathrow Airport,I noticed that a crowd was pursuing someone as they tried to enter a cigar shop in Terminal Three.
I remarked on the growing throng to my wife, who immediately recognised this VIP as none other than Bill Clinton. My children joined the throng and my son's persistence paid off as he obtained the former president's autograph.
As I watched this event from the sanctuary of TGI Friday, I reflected on the irony of the attention given to him in view of the adverse press he suffered post-Monica Lewinsky. It was clear that these lapses had been forgotten or overridden by his dynamic personality.
I compared his survival with that of the oft-derided IFA sector, most recently told by Treasury economic secretary Melanie Johnston that it is surplus to requirements (despite this contradicting Social Security Secretary Alistair Darling – he of the sheepdog fame – and before I move on, perhaps we will soon have a new cult television programme, One Man and His Stakeholder.)
Seriously, the image of the IFA sector has taken many knocks. It has not quite acquired the Clinton nonstick coating but the general public are beginning to appreciate the value of real independent financial advice.
On more than one occasion, I have promoted the isolation of advice as a method of focusing on its true value. To see some of my fellow IFAs state that product purchase is where the value lies scares me rigid as it fails to recognise the commoditisation of product purchase that seems to increase every day.
Or, as one planner once said in the US, at the time Charles Schwab is slashing the cost of product purchase, commission is heading towards zero.
If the IFA sector is to survive, we need to focus on the added value we can deliver and start by recognising our past errors, a la Clinton.
If we to fail to change and to continue to protest our innocence, we risk the public reflecting on what has gone before and determining that perhaps Johnston has a point when she claims advice is not always needed.
We must sell advice and promote the value of independence but first we must ensure that standards rise to AFPC level. When I attend workshops run by product providers, I cringe at the level of knowledge and the lack of realisation that some IFAs are clearly incapable of dispensing good quality advice.
The move towards ISO certification for financial planning gives far too much credence to a process which all too often provides little more than 20 and 30-year projections when few individuals can see further than three or four years ahead. Indeed, any good quality statistician will recognise the fact that too long a time horizon simply results in a greater degree of error both upside and downside.
If an ISO is needed, it is in the soft skills department and not in mastering Excel to the point of analysing the square root of zero. Communication skills must be improved if we are to ensure that the quality of advice rises to the professional level.
Limiting the length of reports and reasons-why letters would help in that quality would soon overtake the quantity approach that is so evident today.
I make no apology for the Clinton analogy or the call to raise standards for IFAs. In many cases it is sub-FPC3. So let us stop excusing the past and start promoting the future.
Robert Reid is principal of Syndaxi Associates