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I have always been a huge fan of Ken Davy since I met him 16 years ago, when he was in the process of turning DBS into what was then the most powerful IFA network.

Ken is one of the few people who has built up not just one but two financial services empires, first at DBS which was sold for £75m in 2001, netting him a few quid, and now at SimplyBiz.

His financial services business experience makes Ken an outstanding individual and his comments are always worth studying. Last week was a case in point, as SimplyBiz published its response to the retail distribution review. When I caught sight of a few snippets in Money Marketing, I raced to the SimplyBiz website to find out more.

As we have come to expect from anything influenced by Ken, the response offers a mixture of insight, pragmatism, strong opinion and some very interesting views on a range of issues related to the industry. It also reveals that apart from his skills as a businessman and, once upon a time, behind a camera, Ken is also a bit of a magician. I’ll explain what I mean by that in a minute.

First the good points – as a strong supporter of the LIA for many years before its merger with the Society of Financial Advisers, it is hardly surprising that Ken is a strong advocate of qualification-based professionalism. He also backs the long-term aim of the RDR to see all IFAs achieve chartered status.

The pragmatism comes with the next element of his response to the RDR, namely that such a goal needs to be very long-term, perhaps as long as 10 years, with staging posts in between.

The response proposes: “Our vision of the future is one which ensures that within six years every client of an ‘adviser’ will be confident they are being advised by someone who is a member of a professional body and qualified to the equivalent of diploma standard or above or that the advice is being overseen by an adviser or compliance officer of diploma standard or above.

“We believe this should be a staging post to the time when chartered status becomes the accepted benchmark. The timing of this is difficult to predict, however we visualise the majority of firms achieving chartered status within the next 10 to 15 years.”

To rush into things, to force IFAs to take and pass exams and become qualified at that level far sooner could potentially lead to the decimation of the IFA sector, Ken believes: “Our own considered view is that depending on the length of the transition period, the shortest being three years and longest being 10 years, between 10 per cent and 30 per cent of today’s advisers would leave the profession.”

Instead, Ken proposes an extensive system of grandfathering of existing IFAs. I am not sure that is good enough. Yes, some form of grandfathering is necessary but so is a system that causes some IFAs to take seriously the notion that in order for them to be granted professional status there is a need for them to show willing in more ways than, for instance, “remaining members in good standing of an appropriate professional body.”

Some consumers, myself included, might wonder whether this is aimed more at replenishing the PFS’s coffers rather than demonstrating a new-found conversion to professionalism.

But it is in his response to the “commission versus fees debate” that Ken displays his skills at prestigitation. Again, unsurprisingly, he backs customer-agreed remuneration as “enabling relevant payments to be made either directly by the client or via the product provider in a manner which is robust and transparent. Most importantly it should also put an end to the sterile debate about fees and commission.”

Knowing Ken’s long-term support for commission-based remuneration, one is tempted to conclude that CAR is more than likely to involve a continuation of the current status quo rather than a new dawn for transparency.

But in a deft move, Ken then moves away from the “sterile debate” over fees and commission to talk instead about overall product costs: “We find it astonishing that total expense ratio or reduction in yield, operated in a similar way to APR, would not be the preferred method of disclosing a product’s costs to the client with, of course, any additional fees being charged being also disclosed.”

Now, it is important for consumers to know the total cost of a product and the TER is a great way of achieving this. Yet what Ken is doing is substituting a discussion about the cost to the client of receiving advice about a product to the cost of buying the product itself.

Most conjurers do the same – they distract their audiences with patter or gestures in order to perform their tricks. By getting people to focus on something that is not immediately relevant, they fail to sort how the underlying illusion has been carried out.

Ken, it would appear, has learned one or two tricks of his own. The problem is that once his audience files out of the hall and realise what he has done, they will not be as well disposed to him as they might have been.

Nic Cicutti can be contacted at


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