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Polin: RDR will cast a light on poor performing firms

For the many years I have been in the industry, I have very much been on the provider side of things but after taking the helm at Ashcourt Rowan, I find myself looking at things from a distributor’s point of view.

I have not found myself here by accident. It has become increasingly clear to me (and I know that I am not alone here) that there has been a discernible shift in both power and value towards product distributors rather than the providers.

Like so many other sectors in financial services, wealth management has somewhat of a chequered past. Certain big companies have overstretched themselves leading to what can only be described as car crashes. I am not one to name names but I am sure we can all think of a few examples of pretty ropy management in IFA business, both large and small.

I am not sure we have seen the end of it either. As we get closer to the RDR over the next 12 months, I think more and more examples of bad management will come to light. This will obviously create a lot of headlines and interest in the sector but it will also create a vast array of opportunities for those firms that have got their heads in the right place, for want of a better expression. And these opportunities should be grabbed with both hands, both in the lead-up to the RDR and beyond.

For those firms which are well placed to deal with the changes that are coming, I think we will see two main opportunities come to the fore.

The first will be the bargain buy – something we are already starting to see. This is where a firm will be able to acquire a failing business at a bargain price – a great opportunity, providing the buyer has the wherewithal and the ability to sort out said failing business.

The other opportunity wealth management firms have is to position themselves as a safe haven for IFAs who are looking for a new home. This is not going to be as easy as it sounds as I believe only the cream of the crop will be worthy of safe haven status.

The RDR is obviously a good thing for the industry in terms for forcing transparency, ensuring advisers have received the right level of education, etc, but I think one of the most important things that has happened as a result is the big beacon that is being shone over the industry. It is focusing the glare quite squarely on those practices that should have no place in our industry and on those firms that have gotten away with it for far too long.

As Warren Buffett said: “It’s only when the tide goes out that you learn who has been swimming naked.” And make no mistake, the tide is most definitely on its way out.

Jonathan Polin is group chief executive at Ashcourt Rowan

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. The unintended consequences of the RDR will of course be the lack of innovation, reduced product choice and of consumer detriment with the ban on investment product commission payments for advice and services.

    So called lack of transparency with the voluminous content of KFDs etc has not been an issue for years.

    The iFA sector will deplete, the cull has already started from the older experienced end of the sector and the young bucks coming into this new world have little or no comprehension in how to deal with clients, their so called higher qualifications have little meaning to the public who simply want to know where to put their money so that it is relatively secure and can produce returns which keep pace with inflation and possibly beat it.

    Knowing the Beta value of a share in a portfolio has little relevance to the clients planning needs.

    It is performance, performance, performance which really matters and if fund managers cannot perform, why advise clients to invest.

    The RDR will skew the market place for consumer friendly financial products and will mistakenly put the distribution of financial products in the hands of banking institutions who to date have lamentably failed to act prudently with clients money.

    Fine words from Mr Polin, but I feel that RDR has taken no account of consumer needs, was poorly researched as to its goals, badly constructed, put forward for implementation in such a short time scale and took no notice of industry practitioners views

  2. Bit early to be hitting the sherry Mr Polin?

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