As advisory businesses get prepared for the impact of the retail distribution review, we are receiving more flesh on the bones about the way that financial advice is to be charged for from the beginning of 2013.
The FSA’s quarterly consultation paper 10/12 outlines a few RDR-relevant issues which sadly I think in some areas simply points out the obvious. For example, advisers cannot earn trail commission unless they disclose it and provide services that justify earning the commission.
Consultation paper 10/12 also contains a proposal to amend the FSA handbook so that adviser firms must notify the regulator if any staff member breaches competence and ethics rules.
May I ask you how likely will this happen? As the issue of ethics rises in importance, we have financial advisers forming self-interest groups to determine how financial advice should be provided.
I was fortunate to attend the inaugural meeting of the female IFAs and brokers group set up by Vivian Slattery a director of IFA Monetary Solutions to help promote the standing of women financial advisers and mortgage brokers within the profession. Held in Fidelity’s offices in London, the only male in the room was Geoff Mills presenting his thoughts on wrap and platform issues. What a change to be in a financial services event with an absence of testosterone (no offence Geoff!).
It is a shame that over the last 10 years female advisers have constituted only about 8 per cent of all financial advisers. IFA Promotion’s www.unbiased.co.uk will allow the gender of independent financial advisers to be specified in their consumer search free of charge. In fact, all IFA listings are free, so why IFAs choose not to be listed on unbiased is beyond me. Even if IFAs say they do not want or need new clients, I defy any IFA to turn away a free www.unbiased.co.uk lead that is a high-net-worth or corporate client.
In the meantime, watch out those IFAs who stand still as Project Eve is set to launch next year. This is a group of six male and female financial advisers who intend to reinvent the way that financial advice is perceived by and given to consumers. The group believes financial planning should be like life coaching and should focus on giving people the resources and financial expertise to help them move forward and achieve what they want in their lives. The mighty UBS is helping the project financially to deliver free financial planning for people in financial difficulties.
The number of options for those who are financially excluded or unable to access regulated financial advice, those who will never have to be concerned about the RDR’s adviser-charging appear to get larger and larger. There is Cfeb, the Citizens Advice Bureau and numerous debt counselling services to name just a few. If I were my recently made redundant friend who is not fee-tolerant I would be so happy for her if she could build for a lifelong financial planning relationship with a professional to share her wishes, dreams and personal information, knowing there was a financial planner the quality of “iron man” Bruce Wilson, ACA FIFP CFP DipPFS, (a founder of Project Eve), to make recommendations on what she should do with her hard earned money – free of charge.
Perhaps the FSA should concentrate even more on getting financial advice to those that really need it, to those people who will never be lucky enough to be affected by RDR adviser-charging.
Kim North is director of Technology & Technical