The last 12 months have been a challenge for all of us regardless of business model and on top of that we have a new regulator. In case it has escaped you notice, I am given to being direct in my thoughts and comments and this looks like it could be the key trait of our new regulator. This is, in my opinion, no bad thing.
We have suffered from the regulatory form of QI for far too long with key individuals in the FSA playing the part of a poor man’s Stephen Fry.
TCF is one such conundrum, where the regulator’s language was only a hairsbreadth away from legendary management consultant speech. What is more interesting was its wish to make the C in TCF stand for customer and not client, reflecting its lack of acceptance of the value of advice and its over focus on the distribution of products.
This clarity of language needs to reach the charging systems for advice. Why is it adviser charging and not advice charge?
Also after all the research, we now have the FSA telling us to make sure it is used correctly and does not disadvantage the client now or in the future.
This reminds me of a conversation I had with a senior regulator at the time of CP121 who remarked that we would end up charging fees in the end if product bias was to be totally avoided.
Well I suspect we are getting there sometime soon. I for one see adviser charging lasting for a very short period and a smarter option appearing almost by osmosis.
We also need to guard against producing book-smart advisers who have zero client empathy. I regret I have met one to many to see this as a rare issue.
It is true we need paraplanners to prepare advice that can command a premium price, but we also need a supply of advisers who are well qualified and can empathise with a variety of client types.
Rather than rush headlong into level six for everyone let us think about the soft skill shortage. There are already suppliers in this area and perhaps the emphasis from the professional bodies could move from facts and figures, to people and their needs.
Steve Webb has gone from credible to incredible, sorry un-creditable in such a short space of time. His recent comments on consultancy charging and small pots seem to ignore logistics. When Nest inevitably slows, as it will when smaller employers start to enrol, then Webb can opine on the ease of operating group pensions and hopefully by then he will have considered how to protect “follow me” small pots from consolidating into more expensive products.
Why is there such surprise that consultancy charging is a mess? And before someone shouts lets do commission instead I can think of many providers who would want to run in that direction.
Furthermore, I suspect that legacy commissions on group pensions will not be ring-fenced as it is now. Just how many employers will then swallow the fees that will have to be charged remains to be seen, but you should have no doubt that is where we are headed.
Those who have bought books of GPP may start to wonder if that was a smart move.
In closing can I wish you and yours all the best for 2013 whether your posting on the MM website is anonymous or real!
Robert Reid is managing director of Syndaxi Chartered Financial Planners