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The age of reason

Kim North

Last week, the Treasury select committee MPs asked the FSA’s Hector Sants and Sheila Nicoll about the average age of financial advisers – sadly, they could not answer what I believe was a reasonable question.

George Mudie, MP, suggested it would make sense to “grandfather” the over-60s, who would need to spend considerable time and money on qualifications that will only be useful to them for a few years. However, the FSA reiterated its opposition to any grandfathering as the majority of respondents, including Aifa, were against the proposals, telling MPs that advisers have had plenty of time to work towards QCF level four. The FSA agreed to write to the TSC with the number of older advisers in the market and consider the issue further.

Now if I were up before a Treasury select committee and I knew they had collected 203 submissions on the RDR from IFAs, providers and trade bodies, with many mentioning they wanted grandfathering, I would certainly find out how many advisers are aged over 50, with 10 years’ plus experience, who are not at QCF level four. As we all know, it is wasting everyone’s time discussing grandfathering without the relevant numbers.

Hector Sants apologised for upsetting advisers with a previous comment – that the FSA believes 20 per cent of advisers will leave the industry. The FSA has revised this to 10 per cent, or 6,100 advisers and 10,000 people leaving the industry. Half a million UK consumers every year use to find an IFA. Where should these people be sent with 6,100 fewer advisers? To fend for themselves and find an execution-only route for their investments, pensions and protection needs? Or seek simplified advice, which the FSA still believes is a good idea. Can anyone prove to me that, over the longer term, cheap and simple products are best for the consumer?

The FSA says it will evaluate the RDR to see if it is improving outcomes for consumers, and will undertake a post-RDR programme to monitor levels of consumer trust and confidence in advisers. Mr Sants told the TSC that consumer trust is a “key yardstick” by which to judge the success of the RDR.

As any marketing expert will tell you, if a brand or product is marketed with the words “trust me”, the reverse happens and trust is not established. Trust is a position that needs to be earned. I have been part of a lot of research asking consumers what they need from financial advisers to trust them. They respond they “want to be looked in the eye, they want to be provided with advice that suits their needs and, very important, they need to like the adviser” before trust is established. How will the FSA or FCA measure this?

Mr Sants said to the TSC: “I have gone out of the way to encourage within the FSA an awareness of small firms’ agenda.”

Having spoken to many FSA people, they definitely have an awareness of small IFA firms but ask them what they do to service their clients and the community and they generally cannot answer beyond that they provide financial advice. Many IFAs are pillars of their community who educate, assist and support their clients in many other ways in addition to providing unbiased, whole of market advice.

It would be a travesty if large numbers of quality advisers choose to leave.

Kim North is managing director at Technology & Technical


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Well said, Kim.

    And not just a “travesty” if the FSA forces good quality advisers to quit by implementing the RDR in a “no holds barred” way. It will also be a disaster for the clients themselves to lose the services of their trusted adviser.

    The trouble is that when dogma and straight-line thinking rule the roost at Canary Towers (as they invariably do) the outcomes will be dire for many IFAs and countless consumers alike.

  2. “The FSA says it will evaluate the RDR to see if it is improving outcomes for consumers, and will undertake a post-RDR programme to monitor levels of consumer trust and confidence in advisers. Mr Sants told the TSC that consumer trust is a “key yardstick” by which to judge the success of the RDR”
    After the RDR is a bit late. the damage will have been done. Will the fsa ask those advisers who felt it better to retire a couple of years early to come back? No, they will simply twist the statistics to prove their point.
    Is it the advisers aged 60+ who are responsible for all the missselling the fsa bangs on about?
    I doubt it. In which case there will be every bit of misselling going on after the RDR, as that age group are the least likely to continue.
    Passing an exam will not suddenly provide you with integrity or cause a client to trust you more. One is either trustworthy or they are not.
    I know what I would like to do with the yard stick!

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