As readers will know, I have been away from work since February with cancer and hope to be back next spring. I took a night off from the treatment and all its side-effects to support Aifa at its 10th anniversary dinner. It was good to see so many people there and my fellow directors at Aifa, all of whom have been unstinting in their support this year – they reflect the strength of the community we work in.
John Gummer’s speech was inspiring when he reminded us that putting the customer at the heart of a business is the only true measure of professionalism. However, as I listened to groups talking about the RDR and the likely consequences, I grew increasingly uncomfortable.
There were many leaders of the life industry and our profession there who seemed to think that if a few thousand advisers could not meet the arbitrary date for qualification, then it would be less competition for the survivors and just bad luck.
Others seemed to think that increasing their annual fee to at least 1 per cent on top of additional charges for their own admin system was morally superior than taking a commission, which, over 10 years, would actually have less detrimental effect on the investment.
True the die is cast, as it probably was from the beginning. When I saw the composition of work groups that the FSA formed two years ago, I was struck that only two of the 42 people were from small IFAs.
From Ned Cazelet’s rapid-fire presentation and Callum McCarthy’s “The industry is broken” speech, it was obvious that life companies could no longer afford to keep buying businesses, especially when IFAs were using the same weapon against them by refunding it to clients to make up for the woeful miss-management of with-profits funds. So the FSA have done the job the life industry never had the bottle for.
No one can argue about the need for competence, particularly in the fast changing world of financial advice, so I welcome the drive to higher standards. However, we need to ensure we use all means possible to assess that competence, as is the trend with education now. Relying just on an exam will fall well short no matter how much the educational bodies are able to charge.
As I ponder my return next year, I worry about what I will be coming back to. I started in financial services in 1976 with the building society movement. It was a simple business then – and growing. I remember well the enormous satisfaction and yes, pride, at helping people buy their first house and the tremendous effect it had on me when I delivered a life insurance cheque to a grieving widow and her daughter in Hull.
The building societies continued to grow on a simple premise. Life insurance was very much the same, with over a quarter of a million representatives inculcating a savings culture into society.
Now building societies are all but dead and the life industry shrinking.
You only have to look at the press to see the misleading headline rates for savings and the seemingly endless hidden charges to see why. They have lost the trust of most and deservedly so.
The City has gone the same way, with risk upon risk taken for short-term personal gain at the expense of ordinary savers. So perhaps you can understand my concern about IFAs.
The new paradigm is to seek wealthy individuals, put them on a wrap – despite the extra expense – and sit back and seek to increase their annual “fee”. In the last five years, I have never seen a single piece of research into consumer attitudes to wraps.
The new mantra is funds under management and most flock to the altar. I am a reasonably wealthy person and yet my wealth would have been devastated by the cost of the chemotherapy that I cannot get on the NHS. The need for protection has never been greater, whatever the socioeconomic.
The need for advice has never been greater and yet most talk about ditching “unprofitable” clients. Our own professional bodies talk about culling older IFAs who cannot cope with exams. It is also worth reflecting on the Conservative promise to replace the FSA with a consumer body rather than an institution run by and for the banking community.
Can I make a plea among the inevitable wave of change? Let’s not go the way of others and lose the trust we have worked so long to earn. Let’s talk less about each other and more to each other. Whatever model we aspire to, let’s make sure the customer is at the heart of it and not pour disdain on others who choose a different, but just as viable, model.
Let’s also ensure that we provide an example to people starting with us. My own son has recently started as a trainee IFA and I want him to be inspired in the same way I was all those years ago.
Everything we do must be led by retaining every competent adviser we have and offering the best service we can to as many as we can. Whatever happens, I look forward to winning my own battle and returning to a profession I can be proud of.