The FSA and other key stakeholders must be getting seriously concerned about what the market might look like at the end of 2013. There are some worrying trends emerging as we see more senior people leaving the FSA and few, if any, of the original architects of the reforms left. There are more and more potential costs being heaped on businesses of all sizes and there are not too many obvious winners yet from the bigger- company sector.
It is all very well assessing that advisers are RDR-ready because they have either finished or are close to completing their level four qualifications. There are still some advisers contacting the IFP who have not started to address the exam requirements or who do not know about gap-fill.
Even if all this is taken care of, there is a growing acceptance that advisers do not have the tools and, in some cases, the skills to deliver a clear financial planning service proposition to their clients.
The bigger businesses in particular seem to be struggling in today’s environment. Even though demographics prove that there is a great opportunity for financial planning firms, the financial models for the market as a whole do not appear to be stacking up. It is clear that the operating and regulatory costs in particular are going to increase over the next few years. What is not so clear is how these businesses are going to increase revenues in the fee-based environment when advisers have not had the experience of working in this way.
To charge fees effectively, advisers need to have confidence in where they are adding value and the service they are providing their clients. This takes training and, in some cases, a total transformation of culture and working practice. Financial planning, as opposed to the selling of the product, really does need a revolution to happen in some businesses for change to be effective.
Some businesses now need to start thinking a little out of the box to establish who their partners might be to help them deal with the significant challenges of the next couple of years. Businesses also need to ensure their advisers are getting the support they need and in particular, specific training in the areas of planning skills and application.
Over the years, the IFP has seen the rewards of understanding, developing and supporting a financial planning service. With level four qualifications assumed, what is it that advisers need now to deliver the requirements of the business? While the gap between level four and certified financial planner qualifications is considerable in terms of the skills that are required to deliver the financial planning proposition, this is not just about more qualifications, it is about training.
There seems to be an increasing need and demand for courses that help advisers understand and sell financial planning to their clients. Learning these valuable skills and techniques will help advisers to provide a service which is focused on their client and their requirements as well as to develop the tools to put together appropriate planning solutions for them.
The IFP can fill the gaps that other organisations are leaving with relevant support to make sure businesses thrive after the RDR.
Nick Cann is chief executive of the Institute of Financial Planning