View more on these topics

Tom Kean: Confused regulation is holding back advisers


I like to think one of the skills that makes me a decent adviser is the ability to convert complex, illogical and sometimes-opaque notions into bite-sized snippets of information clients might understand. Thirty years in the job has led me to accept, although we live and breathe our subject, that is simply not the case for most clients.

Where you have confusion, you have the risk of market abuse in all its forms, which ultimately leads to a lack of consumer confidence in us.

Every time a new rule comes our way, I always picture myself as a hassled and largely uninterested investor who, in reality, is reaching out for help.

So when the latest guidance from the FCA on the different kinds of advice metaphorically hit our desks with a loud thump, my heart sank with the idea of having to read all 56 pages. If you need 56 pages to say something, surely there is a chance it is too complex? Indeed that proved to be the case.

Right from the off we have confusion and muddled guidance. The paper defines five different types of advice models: execution-only, execution-only for complex products, simplified advice, limited or focused advice and full advice. And last, but by no means least (and this is one of mine), we now have “guidance” for the new pension rules to be delivered by The Pensions Advisory Service and Citizens Advice – two organisations who have woken up to the reality of their thankless and quite possibly impossible task. The fact that we now have five, or perhaps even six, types of advice model is a reflection of how addled our landscape has become.

There is absolutely no chance your average client will understand the nuances and, as a result, all manner of malpractice is floating to the surface, as witnessed by the proliferation of scam websites offering to unlock pensions.

Most sensible adviser firms will naturally “revert to norm” and seek to protect their own best interests, and those of their clients. Most firms tend to have skin in their business and take their work extremely personally. It is my belief that the less this is the case, the more likely you will find poor advice. Banks are a good example of this: they will naturally want to tell their clients everything they feel they need to now without being accused of confusing or, perhaps worse, boring them.

In my experience, most advisers are a cautious lot so, given any doubt, would tend to stick to what they know best and default their proposition to “full advice”. What they are less likely to do is go out on a limb and develop new ways of transacting business in the fear they will get caught out by some unknown twist of fate they could not have envisaged, perhaps decades later.

It almost seems that engaging with clients in new and efficient ways such as simplified advice is too risky. Factor in development costs, compliance and the myriad of other systems changes needed, and it is easy to understand why the status quo is quickly chosen. Given the very apparent advice gap opening up in front of us, one could argue this is too big a problem to ignore.

Tom Kean is director of Thameside Financial Planning 


Old Mutual Wealth 2014

Sesame confirms Intrinsic AR referral deal

Sesame Bankhall has confirmed it has chosen Instrinsic as its preferred partner for investment and pension appointed representatives who choose to leave the network following its closure. Last month, Money Marketing revealed that Sesame was planning the tie-up with the Old Mutual-owned network after it closed for business to investment advisers. Following the restructure of […]

Locking horns.jpg

Locking horns: Garry Heath clashes with Apfa over adviser trade body plans

The launch of a new trade organisation representing advisers has reignited the debate around the industry’s ability to lobby at the highest level. This week Money Marketing revealed how former IFA Association director general Garry Heath is launching a new trade body in May for wealth managers and independent and restricted advisers. Heath says Apfa […]

PFS launches consumer education website

The Personal Finance Society has launched a consumer education website as part a drive to improve its public profile. Yourmoney provides guidance and tools on issues such as planning for retirement, managing debt and saving and investing. It gives tips on how to avoid investment scams, explains the benefits and costs of regulated advice, and […]

State of the markets: global growth

In conversation with journalist Alexis Xydias, Artemis Global Growth Fund manager Peter Saacke discusses the state of global markets and how he is positioning his fund. Peter gives his views on the growth potential of US, Europe and emerging markets, each of which is on a different stage of the road to recovery. And with a […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm