I thought that by the time I got round to writing this column the dust thrown up by the retail distribution review would have settled and that I could write about something else. No such luck. The fact that it has not and that there are so many varying views out there on how the future of advice in the UK should look clearly demonstrates to me the confusion that exists.
Of course, every business, including this one, has its vested interests but the range of opinions aired over the last couple of months and the resulting headlines in this paper have amazed and even shocked me.
There seems to be little clarity on where things will eventually end up in terms of the public becoming less reliant on the state but the overriding desire from the regulator to move toward a more professional IFA sector is overdue and has to be applauded. But I would say that, wouldn’t I? Helm Godfrey provides holistic financial advice to high-net-worth individuals and we welcome anything that helps us differentiate ourselves from the rest of the market.
The RDR proposals should, in theory, put a stop to advisers claiming to be independent and acting on behalf of clients when in truth they are little more than agents for providers. Unfortunately, it will not quite work out like that. The wording in the review still leaves room for the waters to be muddied around independence but I believe the intention is there.
In reality, advisers can only ever act on behalf of the client or the provider, not both. The regulator recognises this and through the RDR is trying to ensure everyone else does too. The result will be that large parts of the advisory market will have some big decisions to make in the not too distant future and this will change the face of financial advice in the UK substantially.
To those that choose to give up the ghost of independence and become agents for the big providers, I say good luck. As the Government continues to push people away from state dependence – positively spun as encouraging more people to save for their retirement – I am sure it will mean there is plenty of business for them.
There is the danger with this that we will go back to the old days of salesmen pushing expensive products on an unsuspecting public but the FSA must be wise to this. It will also be aware that consumer groups and the national press will come down on it hard at the first sniff of a scandal.
To those willing and able to continue down the independent route, like Helm Godfrey, I say congratulations. Collectively, we have an opportunity to change public perception of IFAs for the better and it is an opportunity we have to seize with both hands.
Where does all this leave the consumer? The proposals laid out will be great for us and other quality IFAs but I am not convinced they will do much to encourage more people on middle to low incomes to save and invest for the future – one of the key purposes of the review. I have no doubt that those in charge will find statistics to justify their decisions – they found them for stakeholder pensions – but I do not think the sort of results the regulator is dreaming of can be achieved by simply tinkering with the distribution model. It has been tried before and has failed.
The only way we will see a genuine move towards self-preservation will be through education. A society brought up on debt and seemingly encouraged to take on more at every turn is not one that will be easily convinced to suddenly start saving.
If the Government is serious about encouraging more people to save, personal finance should be one of the most important subjects on the school curriculum. In my opinion, those leaving school would be better equipped for life with a GCSE in personal finance than in something like chemistry or geography but until those in power share this view, tomorrow will look remarkably like today.
Bruce Wilson is managing director of Helm Godfrey