Sussex IFA managing director on why advisers would benefit from a guidance body for best practice
As we all know, advice or guidance can give people confidence in the decisions they make. However, for advisers who need to interpret FCA decisions to work out “what good looks like”, there is no obvious place to go for a bit of a steer or confirmation they are doing the right thing. Genuine mistakes and poor advice tend to be picked up after the event. You only have to mention the words “defined benefit transfers” to see the impact this can have.
Sussex IFA managing director Karl Hopper-Young has an idea that could help the regulator in its quest to produce better outcomes for consumers. He recently spotted a poster for insurance firm Hiscox that said “when we’ve got your back, you can have more front”, which showed the importance of confidence.
Seeing another poster at the tube station for the Chartered Body Alliance – the collaborative body comprising the Personal Finance Society, Chartered Institute for Securities & Investment and the London Institute of Banking & Finance – got him thinking about the way guidance can foster confidence.
“That poster said ‘we ask thousands of questions of our professionals, so you only have to ask one: are you a member of a chartered body?’. I thought that was great. If the body seconded some of its people to create a guidance body for advisers, that would create good advice,” he says.
Indeed, in Hopper-Young’s view, although the professional bodies have interpretations of best practice that they can promote to their members, the problem is it is not an industry standard, unlike the legal profession, where best practice is overseen by the Law Society.
This leads to advisers trying to interpret what they think is being said to them by the FCA, which can sometimes be incorrect.
“I don’t know anyone who willingly makes a mistake,” he says. “I’m in a world where part of my responsibility is to keep abreast of what’s going on but, even with that amount of information, it’s still possible to get caught out.”
There has been talk about the possibility of having a separate regulator for advice firms, but Hopper-Young thinks this is unnecessary. “The FCA is a well-established organisation with jaws and teeth. There is a bad part of our industry that needs punishment but everyone shouldn’t be tarred with the same brush,” he says.
The managing director acknowledges the impact that the DB transfer scandal has had on the reputation of advisers and suggests this is an area that could have benefited from his idea of a guidance body for them.
What is the best bit of advice you’ve received in your career?
What keeps you awake at night?
Regulatory uncertainty and inconsistent Financial Ombudsman Service outcomes.
What has had the most significant impact on financial advice in the last year?
Mifid II, Priips and the Senior Managers & Certification Regime. The speed of change is overwhelming.
If I was in charge of the FCA for a day I would…
Devise an exchange scheme between employees of the FCA and employees of advice firms, and create an advice guidance body through secondment of members of existing professional bodies.
Any advice for new advisers?
Be sure you’re doing it as a vocation, to help other people and not yourself.
He is concerned over the effect that worrying about future liabilities for any advice given is having on the owners of advice firms, adding: “Straw polls in the trade press have shown a number of firms are selling up because they are anxious or scared. Selling your business because you’re scared can’t be right. They should be selling because they want to retire or spend more time with their families. The fear has to go.”
Hopper-Young joined the financial services industry from the Army in the 1980s, having been inspired by some Navy, Army and Air Force Institutes sessions.
“That was a real eye-opener for me. I used to spend money on lager as an airborne soldier but, from then on, I started saving,” he says.
Six years into a nine-year engagement in the Army, Hopper-Young bought himself out of his contract under the premature voluntary release system for around £900 and wrote to lots of UK insurance companies asking for a job.
Coming from a military family, with his father and brother both in the Army, his decision did not go down well initially.
“My dad was horrified that I’d PVR’d after six years. But five years later, he was proud of me and what I had achieved,” Hopper-Young says.
Hopper-Young joined Refuge Assurance as it was the first company to respond to his letters. His district manager was ex-military, which made him feel comfortable there, and he was soon the firm’s top adviser. By 1989 he had moved to Commercial Union, and founded Sussex IFA in 1998 after the group merged with General Accident.
When Sussex IFA went directly authorised in 2002, it had 50 advisers who did a lot of mortgage business.
When the mortgage market was hit badly by the financial crisis in 2007/08, Hopper-Young realised it was the ideal time to reposition the firm, which he says had become mortgage-biased.
1998-present: Director, Sussex IFA
1989-1998: Regional manager (south), Commercial Union
1988-1989: Life inspector, Life Association of Scotland
1987-1988: Insurance representative, Refuge Assurance
1982-1987: Airborne soldier, HM Armed Forces
As a chartered adviser with aspirations of running a chartered firm, he told his advisers to step up and do their exams to become fully qualified IFAs or leave – and that reduced numbers.
“When the RDR came in, it sorted the wheat from the chaff because people needed to do the exams to qualify,” he says.
Sussex IFA also moved to its current premises – a Georgian building with its own well in the basement – in 2007. Hopper-Young has owned the building for many years and is well-versed in its history.
“It used to be a council office and it was once the water source for Hailsham water works; I have an original bottle from 1908. I also have a client who said her grandmother was a maid here,” he says.
Over the years, Hopper-Young has headed regional branches of the Society of Financial Advisers (now the PFS) and the Institute of Financial Planning (now the CISI); been a marketing lecturer at Brighton University; and worked as an examiner for the Chartered Insurance Institute.
He has also been a director and trustee of the National Skills Academy for Financial Services, chairman of the South East Regional Employer board and, during the past two years, chairman of risk, audit and finance at the NSAFS.
Does he believe that roles on industry boards outside his day job can really shape the industry?
“When I read the financial press and see IFAs on forums resigning from their positions, saying they don’t have enough influence and couldn’t make a difference, it has a lot to do with not knowing what you are up against,” he says.
“It’s a tough industry to change and you have to join an organisation with your eyes wide open. Trying to influence things and get a say is a skill; you have to prove yourself on these boards.”