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Robert Reid

Last week, I reverted to my childhood by buying a spanking new drum kit. For stress release, the drums have no equal and, with the potential bonus of forming a rhythm section with Lucian Camp, this was a purchase with no regrets. I had forgotten how good it felt to play the drums. I wish the clock could be turned back in this sector, too.

When the payment menu was first mooted, it brought cries of acclaim which reminded me of Scotland’s send-off to the World Cup in Argentina in 1978 when we celebrated as if the cup was ours already. Big mistake. The menu was designed by a committee of insurance company personnel although each company claims the rights to the final design. Myself and others volunteered our help, only to have it rejected out of hand in a manner which did Aifa no credit. This secrecy and lack of truly all-market input left us with a menu which is product-focused and makes price the only relevant point of discussion.

Why Apcims was not invited to participate is baffling, especially when IFAs are recognising the need for holistic investment management facilitated by wraps. If that was not enough, we find that the market statistics in the menu are nonsense. But when the menu refers to “average” commission, what do you expect?

The FSA has been very smart by allowing the industry to design the menu and putting itself in the position of having to accept the outcome. You wanted it and now you’ve got it! As I always suspected, CP121 could still make a reappearance. As the menu fails to communicate, we will need to expand on what we do and why we should be paid for it.

Can I invite the ABI to take part in a round table discussion hosted by Money Marketing to consider what can replace the outdated commission system and how we can ensure that the professional adviser is fairly compensated for their expertise? We will ensure that all segments of the market are represented for the redesign that this menu sorely needs.

Despite my criticism of Aifa, I have sympathy for David Severn, who allowed the menu to take root and now finds he wants to prune it before it blooms.

If the intention of the menu and the initial disclosure document is to inform the client, I have news for the FSA. It may result in more paper being issued to the client but its chance of it being read diminishes in direct proportion to its volume. We need to try and produce something which people will actually read, otherwise we are simply discharging our duty to the regulator but failing miserably to inform the client. We need to think outside the box and utilise advice from marketing specialists.

My childhood hero was Buddy Rich, the jazz drummer. He always said it is not what you put in, it is what you leave out that makes you swing. Now that is a rule to use when we redraft the menu.

Robert Reid is principal of Syndaxi Financial Planning


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