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Strategy success

The IFP’s view

There has been much more regulatory feedback for us all to consider and the market seems pleased with most of the proposals.

The desire for greater transparency via the platform paper has been well received, although it is disappointing to note the FSA’s initial reviews of businesses using platforms uncovered concerns about how they are being used.

The retail distribution review proposals are acknowledged as benefiting those businesses that have adopted a clientcentric approach and that charge fees which represent good value for the service provided.

The Institute of Financial Planning has been a strong advocate of the need to recognise the fiduciary role of the adviser with their client and a need to differentiate the financial planning service from the provision of more product-related advice. The recent IFP response to CP09/31 restates this important point because there are still grey areas on the definitions of independence.

Another area of concern with these papers is it is still not always clear that the interests of the client are being understood, let alone accounted for with the roles. There is confusion over the situation with trail commission or when a client changes adviser.

More needs to be done to ensure advisers are able to set out a tariff for the service they are providing and are able, in certain situations, to increase the levels of revenue they have previously been receiving. There are inevitably situations where the client proposition is being enhanced and, in some situations, the client might be about to receive a comprehensive service for the first time. It is important that the client’s needs are understood properly and then regulated properly.

A client should also be able to determine if a particular service is something they want. When told how much the service is likely to cost and how it can be paid for, they should surely be able to determine whether this represents good value or not?

The proposed changes in the platform world should ensure a more level playing field which should generate more competition on service and pricing to win business, even though there is a danger that some costs will have to be passed on to the client.

Among all the other considerations, I strongly suggest that firms really need to be thinking through their investment and wealth management proposition. The IFP has looked at a number of evolving business models and found there to be value attached to certain elements which firms need to consider.

A typical evolution of an adviser has been from tied adviser (commission) to independent financial adviser (commission to fee) to financial planner (fee). As a financial planner, particular consideration has been given to delivering the investment or wealth management element. Is it appropriate to move towards discretionary management with the extra cost and responsibility, outsource to a manager of managers or other similar route, or something else?

Within these decisions are the active versus passive decisions to resolve as well. These are crucial areas within the IFP membership and the London conference on April 29 will analyse some of the key strategic decisions that have prompted successful outcomes for three businesses in particular.

Nick Cann is chief executive of the Institute of Financial Planning

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