I am always concerned that my beloved football team Partick Thistle will struggle. This year, however, we have gone off like a rocket and playing really attractive football. I realise that this could all change but I would still support them, whatever happened.
As we all endeavour to get our propositions formulated, we need to understand what drives loyalty and takes price out of the decision process.
At the moment, there are still those who could not cost a job if their life depended on it. It is as if winning any work is more important than winning profitable work. To do the latter, you need to recognise your costs and not set your price to the level of little resistance.
We recently quoted for a small GPP and lost it on costs. This is ironic as I had accidentally under-costed it myself.
The firm which took on this case will possibly realise its error in due course but before that it will slide on service and that omission impacts on all of us.
Some of the providers have approached me about decency limits. Or should they be called indecency limits?
Providers are wondering if they should cap adviser charging but that just demonstrates that the umbilical link to sums invested is the problem. There will be times when the cost of advice is out of proportion to the amount being invested. This simply underlines that advice does have its fixed cost elements.
Adviser charging has been talked about from the adviser perspective and from that of the provider but little has been considered from the client’s view of view.
With the exception of pensions (unless maximising contributions is the objective), I can see little point of using the facility unless you are running more than 10 advisers who are not employed.
The recent FSA paper on incentives was not just for the major distributors. It made it clear that there needs to be more to adviser charging sharing than volume.
Just how this will be monitored I do not know. We cannot force clients to respond and if the retail websites are anything to go by, those who respond are often negative. In any case, linking remuneration to feedback of a positive nature will result in the research being skewed by the advisers encouraging their clients to respond positively.
This is the real challenge of the RDR and not the exams. It is educating the clients not just about the value of the advice but the cost of its delivery.
As I recall, we were promised a regulatory dividend but to date I can see no sign of it. Surely those firms who have voluntarily raised their standards to chartered deserve a lighter touch. This could then help to modify the costs that the public will face once adviser charging takes effect.
There also needs to be some action on toxic products where the manufacturers seem to walk away while the rest of us are left to pick up the pieces or, more accurately, the costs.
Some have called for tests on product knowledge, that is, a form of licensing. In the case of Ucis, this could have saved a lot of clients and non-involved advisers a lot of money by way of contributions to the FSCS.
I realise that all this process and structure may stifle creativity but if that results in less in the way of contributions to the FSCS, then many will join with me in this evolution. After all, if I need unpredictability, all I need to do is go and watch Thistle, even when they are winning.
Robert Reid is managing director of Syndaxi Chartered Financial Planners