You know when you have given your clients sound advice based on everything you can reasonably be expected to know. But will it stand the test of time? The UK has become increasingly litigious and the rules on which advice to clients is based can change in the blink of an eye.
With the passing years comes the benefit of hindsight and no end of claims management companies looking for new leads to pursue.
WPS Financial Group managing director Jon Francis would love to wave a magic wand and create an easier environment for advisers.
“Retrospective changes to legislation upon which we base our advice to clients is a millstone around our necks,” he says. “Something that is developed today can be discarded or seen as inappropriate a decade or two from now. I’d like to see more consensus and joined up thinking between the parties involved in the decision making.
“I applaud every bit of legislation to protect the client, but there’s also got to be more awareness that advisers are dealing with clients on the basis of their knowledge at that time.
“If you look back with the benefit of hindsight, it might not be the right thing but it’s a harsh call to forsee what might happen.”
To illustrate how legislation changes can have a retrospective impact on clients’ financial plans, Francis gives the example of two clients – born a day apart in April – who set up their pensions with the objective of retiring at the age of 50.
When the normal minimum retirement age was raised from 50 to 55 in 2010, the client born on 5 April could take his benefits as planned. However, the client born on 6 April – the start of the new tax year – had to wait five more years to access his.
Francis says this sort of thing not only upsets everything the client has spent years working towards, but also puts advisers in the unenviable position of having to explain it.
“It’s unfair on the client and affects the adviser/client relationship. We walk on eggshells and a tightrope every day we give advice,” he says.
Francis acknowledges the FCA has a difficult job balancing consumer protection with the needs of the adviser community and he believes it is doing a great job on the whole.
“I passionately believe the FCA’s rules are intended to provide as much protection as possible and I applaud them for everything they have done,” he says. “The advice profession now is now light years away from the industry I joined – anything that protects clients from the tiny minority of rogues in the profession is a good thing.”
It’s difficult when you’re getting conflicting reports, results and messages from the FCA and the FOS
However, he would like to see more integration between the FCA and the FOS. He believes more regular discussions and the exchange of ideas would help to prevent discrepancies between the FCA’s communications with advisers and the decisions made by the FOS. “It’s difficult when you’re getting conflicting reports, results and messages from the FCA and the FOS,” he says.
The adviser’s job of listening to clients to understand what they need and reconciling that with what comes out of the FCA and FOS isn’t always easy according to Francis.
“A good example of that is the British Steel debacle,” he says. “IFAs are almost frozen in the headlights. With our knowledge and understanding of clients’ individual circumstances, pension transfer decisions can be clear but advisers are in fear because it’s not always easy to follow compliance with the FCA and FOS, and know you’re doing a good job for clients.”
Francis is also concerned that the UK is following the US in becoming a more litigious society. “The claims culture we have in the UK is also making our job more difficult,” he says. “It’s a nightmare. I do have a firm belief that 99 per cent of advisers genuinely try to do the best thing for their clients.
“There has got to be accountability but so often the 99 per cent are tarred with the same brush as the 1 per cent of rogues and the ambulance chasers can undo so much good financial planning from just a few years ago.”
Francis has first-hand experience of industry rogues – during his previous career as an economics and geography teacher he had been misadvised to leave the Teachers Superannuation Scheme to go into a personal pension.
He then joined one of the teachers’ unions, which had links with Commercial Union Financial Services, joining the firm as a financial adviser in 1990 before leaving two years later to become an adviser. “By then I had learned the difference between tied agent and independent adviser,” he says.
In 1995 Francis started his own advisory firm with two former Commercial Union colleagues, but they decided to go their separate ways in 2004 as they each had different plans.
Francis explored opportunities for advice in the Sipp and SSAS market and launched specialist advice firm Self-Invested Portfolios, which now trades as SIP Wealth Management, in response to market forces.
“There was a huge movement in the Sipp market towards the freedom to invest in the full range of investments at that time, although it recoiled from residential property,” he says.
By 2012, Francis was chatting with his previous business partners and they decided to bring their firms together under the WPS umbrella in 2013. “The individual firms came together but we each have the autonomy to do something different underneath the group structure. We get the best of both worlds,” he says.
The brands that make up the group – SIP Wealth Management, WPS Wealth and Bevan Buckland Wealth Management – are set up as appointed representatives within the group structure.
Francis says the maximum number of ARs allowed before a firm is classed as a network is four and the group has no plans to increase its number of ARs as it would mean more onerous compliance requirements – something he has good reason to avoid.
“I suffered a mild heart attack last year – I’m exceptionally fit and active, so it was quite a shock. After that I evaluated what I wanted to alter in my life – work a little less, relax and absorb a little less stress,” says Francis. “Our plan is to grow each of the brands at a manageable rate.”
What is the best bit of advice you’ve received in your career?
That overnight success generally takes about 15 years.
What keeps you awake at night?
The arbitrary nature that FCA guidance and FOS decisions are allowed to change things with the benefit of hindsight rather than applying the knowledge that existed at the time.
What has had the most significant impact on financial advice in the last year?
Pension freedoms and DB transfers.s
If I was in charge of the FCA for a day I would…
Increase at every level its relationship with financial advisers.
Any advice for new advisers?
In the property market there’s the saying ‘location, location, location’. For new advisers, it should be ‘qualifications, qualifications, qualifications’.
2004-present: Managing director, Self-Invested Portfolios; from 2013 managing director of WPS Financial Group
1995-2004: Co-director, FWR Financial Management
1993-1995: IFA, CE Health Financial Services
1990-1992: Financial adviser, Commercial Union Financial Services