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Seven up

Alan Lakey, partner, Highclere Financial Services

I hope that 2007 will be the year that we address many appalling imbalances and restore a modicum of fairness to this industry.

The first unfairness is the propensity of the Financial Ombudsman Service to deliver judgements which fly in the face of common sense, ignore time-honoured laws and deny the victims their basic human rights.

I would love to see (but do not expect to) the end of the meritless retail mediation activities return (RMAR). This dreadfully convoluted process conveys negative cost-benefits (regulatorspeak for value).

Just who devises these torments? Essential information could be conveyed using a far simpler format on an annual basis.

Many stupid comments have been made, not least by the regulators, regarding commission-based advice. The regulatory compass is pointing towards a commission-free zone, which will result in the disenfranchisement of a large segment of the population.

Fee-based advice is not intrinsically superior and both methods of payment have their merits – leave it at that.

Incidentally, John Tiner, David Kenmir, Hector Sants and Clive Briault all receive “performance-related bonuses”. As we all know, that is an Equitable Life phrase meaning commission.

I believe there is an argument for true non-status lending. This was available before mortgage regulation and definitely has a place in today’s complex society.

The mendacity of grotesque career politicians must end and justice must be done for the 125,000 people who have lost their occupational pension scheme rights.

Unlike advisers, the Government can choose to ignore the ombudsman. Unlike advisers, the Government can provide false information and later pretend it was not advice, merely generic information. This is disgusting and untenable in any civilised society.

Like every adviser, I wonder at the capability of a Government which has made an art form out of U-turns. The reneging on pension term assurance legislation is contemptible and removed the last vestiges of respect for a disgraced and disgraceful regime.

I would like to see a resurgence of interest in income-protection plans. Currently, they are badly designed, fail to meet clients’ needs and engender distrust.

The new working party and product improvements from the Pioneer and Cirencester Friendly Societies should help in reviving interest.

Finally, I hope that 2007 is the year when direct sales, whether off the page or the bucketshop variety, are seen as the lesser creatures they are. Independent advice is paramount, whether we are talking term insurance, mortgages or pensions.

Jason Witcombe, director, Evolve Financial Planning Take pension term assurance for example. Providers and advisers spent millions making sure they were ready to enter this exciting new market and now it seems that the Government is disappointed that people are actually making use of the new rules and saving a bit of income tax. What exactly did they expect to happen?

It seems crazy to punish those very people who are making an effort to protect their families in the event of premature death rather than, presumably, relying on the state. I hope there is a swift and positive resolution to this debacle.

The Government has made a big song and dance about its generosity in extending Isa allowances indefinitely but it is a disgrace that it even considered scrapping them. I hope it does the decent thing and increases the investment limit to £10,000 and gives us the choice whether we want to invest this into cash or stocks and shares rather than telling us what we can and cannot do. In real terms, Isa limits have been decreasing since 1999 due to inflation.

I would also like to see some of the big US fund managers launch index funds in the UK to strengthen price competition.

Like many financial planners, I believe it is highly unlikely an active manager will consistently outperform a relevant benchmark index through a range of differing economic conditions and conclude that clients are much better served by low-cost index funds. More competition will further drive down index fund costs.

I would love wrap platforms to be more competitive in terms of charges and do not feel that any one company has really tried to steal a march on its competitors yet.

Advisers and clients want a simple charging structure where it is easy to see the benefits of consolidating investments. I think that providers need to take a longer term view on this and not to expect profitability overnight.

Martin Bamford, director, Informed Choice

I hope that the financial services sector will demonstrate more mature attributes in 2007.

By this, I mean real evidence that it is basing all that it does on the principles of treating customers fairly.

But to do this, the FSA also needs to behave in a mature fashion and commit to TCF entirely. It should not try to run a dual system that catches us out with a double whammy of the “tickbox” mentality coupled with a subjective interpretation of what TCF means to it.

Clear and simple communications are essential. TCF could be the most important thing ever to happen in financial services or it could become a big regulatory stick wielded by an out-ofcontrol regulator. I also hope that the clear blue water emerging between financial salespeople and financial advisers/planners continues to grow. There is an absolute need for both disciplines but it is the historical bundling together of these two distinct practices that has caused so much confusion.

It is probably one of the reasons why the payment of the adviser through commission has been under attack, particularly because there seems to be a dichotomy between independence and the payment of the adviser through commission. I fully expect the argument against up-front commission to continue through 2007 and it would not surprise me to see the writing on the wall turn into action against indemnity commission.

Any successful adviser will have to make sure they are appropriately qualified. Those “salespeople” who erroneously continue the redundant argument that experience is more important (as an excuse for their laziness) will find themselves even more marginalised.

One thing I am confident about is that 2007 will be another tremendous year for the professionally qualified, appropriately experienced and customer-centric adviser. The UK financial services world is so complex that advice will remain an extremely valuable commodity.

Ashley Clark, director,

Every year, the goalposts move on regulation, the Government piles more misery on employers and taxation keeps changing as the Treasury tries to plug the holes that we find and use. I sincerely hoped that 2007 would bring a change but, given the pre-Budget report speech, that seems unlikely.

I hope to see more regulation, not goalpostmoving. Unsecured loans, second-charge mortgages and credit cards need to be regulated. The abuse that takes place in these areas of finance is frightening.

I want to see the FSA taking action against both ambulance-chasers and phoenix firms.

Ambulance-chasers need to be regulated and the client banks of phoenix firms should be orphaned across to those people who are left to pay the butcher’s bill, that is, me!

I would like to see a campaign for independent-only advice. Tied agents, multi-tie, generic advice are all a con. There is no room for inexperienced postal staff with half a GCSE in finance flogging life insurance and the former Mr White Van Man 2006 turned financial adviser offering “generic advice” on pensions. He needs advice himself as he has no idea how pre-1987, post-1987, pre-1988, post-1989, post-1995, post-1997, post-2001 and post-2006 rules affect his own pension.

Generic advice can work if it is offered by experienced advisers on a remote basis and I hope in 2007 I can convince the Rt Hon John McFall, MP, and his Treasury select committee of this.

I hope that the industry will start to act more like a profession. Squabbling over the commission v fees debate and getting some letters after your name for passing Cemap or the Certificate in Financial Planning makes us a laughing stock among other professions. Commission is an integral part of financing advice and using it as a factoring point to cover your fee has to be an option. I would like to see all advisers move to a simple fee structure and use a maximum commission menu where necessary.

This industry is a profession and if you do not think so, then get out.

If you are serious and want to be considered a professional, you have to think and be professional.

A profession means getting qualified and offering fees.

The goal of all in 2007 should be chartered financial planner, I think it is the best thing that the Personal Finance Society has done. It should scrap Cert PFS and Dip PFS – this is what discredits the industry. You are either professionally qualified or not.

Andrew Fay, chief executive, Cavanagh

I would like IFAs to realise the value in long-term income and in improving the quality of service offered to clients but I fear that there will still be too much of a focus on short-term needs as opposed to long-term planning.

I hope that providers and IFAs continue to be more aligned in a long-term working relationship that focuses on value for clients, providers and IFAs but this may take too long for the industry to truly benefit.

I would also like pension investors to be able to see the wood for the trees and grasp the value of current offerings to provide income in retirement.

Until advisers stop product-selling and take into account properly the right advice service, our industry will not be able to claim to be professional as a whole and be truly appreciated by our clients.

Cavanagh has hopes and fears for regulation, especially in regard to TCF. We hope that any new regulation will meet the objective of helping to develop the sector in a fair and professional manner but there are fears that any new regulation could engulf the industry in more red tape.

My concern is that the Chancellor’s continued legislation will further harm the simple request of consumers for transparent and fair financial advice.

IFAs need to recognise that the changes made over the last decade were required and have resulted in the opportunity we now have for a very exciting future.

But I fear that too few IFAs are going to be able to make the right business model work for their companies, thereby holding the sector back as a whole.

We hope that in 2007 and beyond that more will be done to bring new blood into the industry to give the sector growth opportunities and widen the availability and pool of professional advice.

Stuart Bayliss, director, Annuity Direct

I hope that the saving habits that many clients have adopted in 2006 will catch on further still in 2007. I also hope that investment markets will not steam ahead too quickly and that interest rates, while increasing slightly, will not be too painful for mortgage borrowers to handle.

Our industry should adopt treating customers fairly in all aspects of our work, particularly training and product development, both in the structure of products and the purchase and product lifetime processes.

I also hope that we can find a way of bringing maximum pension income to all retirees, which could benefit more than half of those reaching retirement – a way for us to make a real difference.

But I fear that financial advice will continue to struggle to find a scaleable business model and that a lower common denominator will become the norm.

I am also worried that we will continue to fail customers by offering them what we think they want rather than advising them in a holistic way as to how they could best meet their needs and desires.

For those of us who specialise in retirement, I am concerned that in 2007 we will continue to be undermined by a lack of understanding among our fellow advisers of key aspects of the decision-making process especially those that relate to life expectancy and mortality insurance and I fear that new products will struggle to provide the turnkey factor that customers will find exciting.

I also worry about sudden market movements, up and down, in 2007 and a significant housing market correction.


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