However, one resolution that will be good for advisers to keep this year is to improve the health of their business and tackle the bulge, namely, the retail distribution review.
Whatever the merits or otherwise of the RDR, one thing is certain – the environment in which we operate has changed. The national press is awash with advice from desk-bound gurus imploring the population at large to put their finances in order after the excesses of Christmas spending have taken their toll, so now is the time to take stock.
This means that advisers need to reassess their business models and ensure that they are well placed to meet new challenges.
Disappointingly, however, at a recent Personal Finance Society regional meeting, it became clear that the vast majority of attendees had not even started this process. Out of a room of 40 people, only two had done any work on segmenting their client base, four understood their recurring income streams while 90 per cent were still inextricably wedded to the initial commission model. I found this all extremely worrying.
It may be that after the intense debate in the run-up to the FSA’s deadline for responses to its RDR discussion paper at the end of last year, advisers feel that they need do nothing until the next report. Yet any notion that the status quo is sustainable needs to be dispelled quickly.
Nowadays, clients want and have a right to expect choice. It is simply not acceptable for us to squeeze them all into the same model just because we have no desire to change our ways.
Making sure that your business model is right is only one aspect. Many more advisers are embracing the need to improve the level of qualifications that they and their staff hold.
Professional bodies such as the PFS have a key role to play in helping advisers achieve and maintain their professional aspirations. It is encouraging that the Chartered Insurance Institute is reporting a 7.2 per cent rise in membership over the past 12 months.
This growth is not just from advisers. An increasing number of providers are investing in membership and qualifications, with Norwich Union and Scottish Widows recently announcing plans to help advisers reach diploma level.
It is no wonder that many advisers are saying they are feeling the pressure. There is clear evidence of a move towards a bigger is better business model. IFAs are being transformed into national firms but, worryingly, more through acquisition than organic growth and the economic situation is probably only going to accentuate this shift.
The sustainability of this approach has yet to be fully tested but a recession in the UK will come down hard on already tight margins. Outsourcing is one way of improving efficiency but some argue that this reallocation of work to platforms is increasingly turning IFAs into mere distributors of platform services.
A recommendation to get your business in shape is pretty down to earth. It should not be left to the capricious destiny of a new year’s resolution. Some advisers need to stop mumbling their excuses and take action before it is too late.
Tim Eadon is chief executive of the Personal Finance Society