As we look forward to summer, this year, many people will find themselves bereft of invitations to all variety of sports and other events and this is no bad thing.
The use of inducements had got out of hand, to the point where payments were frankly obscene
and did not seem to be supported by a robust business case.
Some firms are now in enforcement and we may soon see who will pay the price for too much largesse.
These payments were not new. Payment of commission in advance for plans that were still to be written is a clear sign of bias in action, irrespective of the adviser being (nominally) independent or restricted.
Just why the providers involved thought their plans would go unnoticed is another sign that arrogance is alive and well in our sector. You can write as many rules as you like but it’s a change in culture, putting the client at the centre, that really changes everything.
For me the FCA inducements paper came as a relief but the issue of incentive payments delivers a major headache for all regulated individuals.
Despite the paper’s wide coverage, many smaller firms see the incentive crackdown by the FCA as aimed not at them but at the major firms.
The truth is that it applies to both large and small firms, with the latter less well equipped to develop a balanced scorecard approach to incentivise advisers in particular.
While on the subject of incentives, I never did understand why the share of revenue between the firm and adviser increased without regard for the increase in risk. Many people I have raised this with agree that risk increases exponentially for most advisers as the level of business builds.
It is important that client feedback features in the scorecard to assess adviser remuneration, along with other relevant risk reduction elements, if we are to try to remove bias from remuneration packages. Just how easy this will be with those in self-employed packages I do not know but these requirements are for all firms, not just the big boys.
Hopefully all the unused hospitality tickets will go to good causes; anything that stimulates a positive image for the sector is to be welcomed.
It would be remiss of me not to mention all the comings and goings at the larger firms these days, be they providers or distributors. The financial services equivalent of an elephants’ graveyard is taking shape as roles that once paid handsomely shrink at a surprisingly fast rate.
What will happen to these individuals?
As the market seeks cost reductions to maintain its margins, all those in senior positions will need to deliver significant value if they are to retain their posts.
They could, of course, decide to become advisers and maybe that will have been the missing skill that did for them in the end.
Robert Reid is managing director of Syndaxi Chartered Financial Planners