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Threats to advisers and the RDR take centre stage at PIMS

Emerging threats to the IFA market, the retail distribution review and future wrap strategies were the major talking points onboard this year’s PIMS.

I had the joy of travelling on the Arcadia last week on its three day voyage from Southampton to the Channel Islands with over 350 advisers and provider representatives and these three intertwined issues created plenty of debate.

Advisers struggled through a torrid schedule of back-to back-meetings and little sleep due to the onboard pubs, karaoke bar and clubs- including the delightful Electra nightclub pumping out the latest chart sounds to a background of popping Champagne corks into the not so early hours. Evidently certain IFA firms that will remain nameless are doing very well for themselves at the moment.

The restaurant during the 7.45 breakfast meetings half-resembled a scene from Shaun of the Dead with bleary eyed delegates stumbling to their tables.

Special mention must be given to the few hardy souls who turned up to breakfast in the previous night’s tuxedos, especially an unnamed investment house representative who then went straight onto deck hoping a few vodka Red Bulls would cure his pain.

Anyway, the shadow of this month’s FSA retail distribution review was cast heavily over the ship with panellists, guest speakers and advisers attempting to second-guess the regulator.

The majority of advisers on-board would class themselves as being in the high-net worth end of the market and most believe they are not the specific target for any radical changes that might be planned.

But there is a general worry that regulatory intervention brought in to solve certain issues could have unintended knock on effects across the market.

Advisers were also split as to whether calls to impose factory-gate pricing on certain sections of the industry would be the right thing to do.

The regulator’s moves towards more principle-based regulation were also a talking point with FSA head of investment in the small firms division Jonathan Fischel fielding worries over retrospection and future interaction with the FOS.

The next steps in the evolution of wrap caused much debate, with the FSA set to put out its paper on the subject around the same time as the RDR.

Discussion focused on how advisers can use wrap to empower their businesses and cut out the provider, worries over incentives being offered and concern about the lack of financial clout behind certain propositions.

There was also worry about the reliability of stochastic modeling tools that compliment certain wraps and debate around where independence lies -at product wrapper or fund level- or whether it is never as clear cut as this.

The threats to the IFA debate perhaps due the largest crowd with panelists discussing whether the old worry about banc assurers taking IFA market share may finally come to fruition.

The consensus was that it was unlikely a large bank would be able to replicate the trust-based relationship that an adviser builds up with clients over the years with staff turn-over and big bank mentality a couple of the reasons suggested.

Time and again debate returned to the fact the adviser community has proved a resilient beast over the last 20 years no matter what has been thrown at it and will again be able to evolve to handle whatever is around the corner.

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