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Robert Reid: FCA should act on trail and non-advice

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This is the month where ’out of office’ notices seem to overtake responses to emails and we can catch our breath as the FCA drops hints as to its priority list.

The regulator’s recent comments on trail commission simply underline the linkage needed between remuneration and services. I know that some will tell me I am wrong, that commission payments are contractual and there is no such link but then they will be the same people who set up GPP’s thinking that the commission on increments was guaranteed and the same people who have not been reading their terms of business letters as they have been rewritten by the providers.

At the same time we have great angst with the advised versus the non-advised debate. The latter term is certainly a better descriptor than execution only but whatever term is finally agreed upon we need to stop people advertising one thing and providing (or more accurately not providing) the expected service.

Firms that call themselves financial advisers should do just that.  If they offer a mix of services then they need two clearly distinct brands or names. We recently had an email from a large firm which offers no advice to the bulk of its clients but their emails call their people “financial practitioners”. Is that right?

Just as the banks have been brought to book, the larger distributors need to be controlled far better than they have been to date. 


As standard annuities become increasingly poor value, I find it hard to see how you can offer enhanced annuities, far less investment linked annuities, on a non advised basis.

Advice at retirement is no easy task and people need help. Currently we have a debate on the pot follows member initiative where on moving job the pension plan follows the member by default. We also need a sweep up of the small pots from previous changes of job or where his employer has moved provider.

Some employers offer no funding for advice for past benefits but many providers will not accept transfers where no advice has been given and this leaves the member in the equivalent of a pensions no-man’s land.


If we are to prosper we need to lose that rear view mirror and start to set the strategy by engaging with the regulator and the Government. To do this we need an aggressive and informed trade body, what we have at the moment is not worth supporting, one is too small and the other far too bureaucratic.

Can I just say I am not volunteering but we need someone who can command the attention of those who matter. The late John Ellis would have been ideal. His quiet diplomacy but nonetheless forceful views are sadly missed by all of us who recognise that at the moment they are exactly what we need. Let us hope that an alternative will soon appear.

The FCA gives me the impression that reasoned argument is welcome but simply wanting no change is untenable and not worthy of an audience.

In closing, can I also make the plea about the lack of control shown in contributing to on line debate, these blogs are not private and in many cases reflect badly on us. I support freedom of speech but some comment border on bullying, that is, only their opinion counts.

We all need to contribute to the development of our sector. Those who are negative and anonymous would be better to be out of office permanently and do the rest of us a favour.

Robert Reid is managing director of Syndaxi Chartered Financial Planning

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Is this the new “political correctness” creep?
    Do not post anonymously or with a negative comment?

  2. its reality not PC i.e. know who your audience is dont assume its kept in the trade.

    Negative comment with no constructive alternative is as much use as a chocolate teapot!

    In my opinion anonymity ahould be the decision of the editor not the individual

  3. When comments are posted with a name via an IPhone is shows as anonymous
    Andy

  4. I can’t say it bothers me when people post anonymously. Some anonymous contributions seem worthwhile and everybody should be allowed to be negative if they want to be. In fact I sometimes think it should be mandatory!

  5. I think the more meaningful debate to have may be bring back commission, lets just ensure that controls are in place to stop abuse and the levels that can be paid are capped.
    The FCA may want to consider what consumers want instead of some hypothetical arguements that don’t work in practice for the unsophisticated public.
    RDR = ordinary people getting less advice and more expensive or inappropriate products in my view.
    I agree that given the current legislation and the environment we are operating in, guided sales or anyone claiming a title which suggests they are an adviser should not get commission.
    Pure execution-only models without advice do seem to be wanted by consumers (thinking about the stockbrokers offering funds).

  6. Praise where praise is due is as important as constructive criticism. It is very easy to criticise and identify problems, it is much harder (as the FSA found with RDR) to identify WORKABLE solutions.
    Like Robert Reid, I actually engaged on the RDR issue from day one even arranging for a skype meeting with Amanda Bowe (original FSA RDR head) and several other IFAs who didn’t want to have to go to London. I replied to most of the RDR consultation papers and made my opinion known along with constructive suggestions. The numbers now critical of RDR is actually higher than it was in 2007 and 2008 when i first started trying to highlight that there were a lot of unintended consequences of RDR looming and now people are asking for it to be reversed. I for one do NOT want to see it reversed, despite having been one of it’s most vocal “naysayers” according to some, but that is because going backwards would be worse than a constructive move forwards.
    Like Rob Reid, I want to engage with the FCA and ideally through IFACentre. I would suggest those who wish to remain Independent join IFACentre and/or APFA and those who have chosen to go restricted join APFA and make their opinions known VOCALLY.

  7. Oh and as to anon posting, whilst a ban would be going too far, anon posting should be a privilege rather than a right, which si why I prefer MoneyMarketing to Citywire’s New Model Adviser as MM vet all postings to at least reduce trolling.
    Most of my posts are under my own name, but one or two are anon and about 3/4 are allowed to go on-line by MM. One or two have been too close to the knuckle/truth and have had to be held back or redrafted. None I would hope would bring the profession in to disrepute I would hope, which is to some extent the point I believe Rob Reid was trying to make.

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