Over the past few weeks, I have spoken to representatives of a number of financial planning and wealth management firms, ranging from the very small to the national.
Key topics of conversation have broadly been the same across the board: growth, profitability and competitiveness, technology and developing services, suitability and disclosure, and coping with regulatory change.
One thing that is clear is the time and energy that firms are spending thinking about the services they are providing to clients and whether they are adding value.
It is encouraging – and perhaps understandable – that all those I have spoken to believe they are providing a service that is of value. In fact, many view their approach as unique, and who am I to question that? If providing suitable advice is a key indicator of value, then the recent feedback from the FCA following its suitability review demonstrates that, on the whole, advisers are indeed delivering. But is that too simplistic an assessment?
Take a deep dive into disclosure
An adviser is often in partnership with the client, taking them on a journey. That journey will have many twists and turns over a period of time that could last many years.
So surely it is a given that, in order to prepare a plan, an adviser will obtain the necessary personal information to conclude the suitable course of action, and be clear about what the costs are along the way? It certainly seems reasonable and will meet clients’ expectations, but does it provide value for money? And, if so, how can we tell?
The FCA comments on a particular challenge in its feedback. It found that almost 50 per cent of advisers are not clear in disclosing fees and charges, whatever the service that is being provided. I think it has a point.
To get to the point where the regulator feels largely comfortable with the quality of advice being provided is a significant and positive step forward.
What is more, if this influences the mentality of those who still start their suitability reports by contemplating how to prevent a complaint, then we may be seeing evidence of a shift in mindset and a confidence worthy of the high professional standards many are achieving.
That said, given the FCA’s finding that only 53 per cent of cases contained adequate disclosure, it is disappointing that this positivity is undermined by a lack of clarity and transparency over what advisers’ services encompass, and what the charge for that service is specifically for. Worse still, some firms are failing to provide even the service initially agreed and charged for.
So, are we making progress? Yes, but it is still a work-in-progress.
Simon Collins is managing director, regulatory, at Eversheds Sutherland