I noted Personal Finance Society chief executive Keith Richard’s recent opinion piece in Money Marketing on the need to curb the increasing cost of regulation.
While well intended, I wonder if the PFS might take a lead on this principle by reducing the punitive costs imposed on those misfortunate enough to pass sufficient exams to progress to chartered or fellow status.
I know a number of people who have the qualification but who do not wish to pay higher fees. Presumably, the PFS is at the same time arguing more qualified people pose a lower risk and should pay less in regulatory fees.
While fees for those studying for these levels start at £74 per annum, those who become chartered are faced with an annual membership fee of £247 should they wish to take up the designation (see table below). The PFS gains the additional benefit of free publicity when it is used. This is without the cost of exams and course books along the way.
Attracting young talent
There is an argument for reducing costs for those newer to the profession, who could probably do with a peg up from the rest. The current structure does not do this, as I am not sure there is a positive correlation between higher qualifications and greater experience, age or remuneration.
We have seen Vito Faircloth become the youngest ever fellow at just 22, with great coverage in the press. He did this in just 21 months – but his reward was a 168 per cent increase in his annual PFS fees.
The PFS released figures in January breaking down its own membership by age (see chart below).
Seventeen per cent are under 40, while just 2.1 per cent are under 30. It would be interesting to see the overlay of qualifications against age demographic but, given the small numbers involved, it seems to me that, without much difficulty, a more equitable charging structure would subsidise the new entrants we desperately need to the profession, not just those with fewer qualifications. That is assuming we want to subsidise it at all.
Anyway, back to my point about the PFS telling other businesses how to make their charging structure fairer for advisers.
We will no doubt see lots of grandstanding from professional and trade bodies over the coming months. Last year the longstop was The Great Campaign; this year it is Financial Services Compensation Scheme costs.
This is a debate well worth having, and I am sure it is sensibly done behind closed doors. But the soundbites we see from trade and professional bodies are dumbed down to meaninglessness, and I fear many advisers will just gloss over them. There is no reason why we should not see the cut and thrust of real debates in public and available on a webcast to view. The technology is there.
We would see the depth of the discussion and the detail. We would see the real opinions expressed, not the populist soundbites given for adviser consumption. And we would see how those appointed to represent advisers really fare. Some industry figures are passengers in these discussions. Some shine. We would move the debate outside the confines of the Square Mile. Wouldn’t it be great to get some of the 17 per cent involved?
Bringing a better debate
For now, we are left with two conclusions. Either there are no well thought out views on contentious issues such as FSCS funding, or advisers are too thick to understand them. I do not believe either are true. It is time to open the doors on these important debates and bring them into the light.
There is also a need for trade and professional bodies to lead by example, modernise and practice what they preach if they want to be taken seriously by all concerned. The consequence of failing to do this is the ongoing disengagement of another generation and the gradual extinction of a fledgling profession.
Phil Young is managing director of Threesixty