We must not forget that we do have “issues” as an industry, ranging from our ability to manage sustainable businesses to the professional standards under which we operate. In addition to our own problems, we have consumers who are thoroughly confused and disillusioned about what we do.
It is not really the FSA’s job to change the way we do business. Its job is to regulate what we do and ensure that consumers are not disadvantaged. If we cannot agree on simple key issues, we will never be able to unite and develop our industry.
We have two key challenges to overcome – creating a united view and understanding our shortcomingsOne would think that, if all of us who work in the same industry did the same thing, we would satisfy the first point. Unfortunately, however, this is not true.
Some of us give ongoing holistic financial advice, others give advice on buying commoditised products (either from the whole of the market, through a single tie or a multi-tie) and others do both. Neither are wrong, better or worse than the other – just different.
All of them help consumers to “save” or “protect” their futures, just in different ways.
The terminology I use suggests both variations give “advice”, which counters what the paper says in that one is advice-giving and the other product-selling.
Clearly, therefore, the FSA has taken legal opinion on what constitutes advice and what does not, even though I think it will find that, if you offer up a recommendation, guidance or an opinion on something, you are giving advice.
So, maybe the points raised by the paper highlight the future landscape pretty well but one cannot overlook the fact that the FSA makes the fundamental error of using the wrong terminology to express them.
If there were two types of advisers – one who gave advice specifically on selling you a product to satisfy a particular need and one that took a much deeper view of your full situation, then we might get there.
If you then assumed that both use products to fulfil their advice and the client’s needs, then you would be discriminating between the payment options. One with commission from the product and one allowing the adviser to charge his agreed advice fee through the product itself – CAR.
Clearly the “product” approach would require a guided sales process for advisers to follow but we know enough about what we do and regulation to make this work, don’t we?
Surely if we agree on the two key ways we distribute advice, we can differentiate and crack on with the detail. We all like to think of ourselves as unique and different but how different are we today or would we be under the proposals?
Isn’t it our own propositions to customers that make us better or worse (or different) to our counterparts? So, how far away are we really from agreeing the bigger picture stuff? Sure, the detail needs working on but before we say we disagree with the proposals, are we sure we know what we disagree with?
Let us take the example of exams and qualifications. The crunch for many advisers is that many, especially the older or more experienced, did not feel that they should take the exams because they were already qualified. We need debate about whether it is academic or vocational qualifications we need, not whether we need any at all. My view is that we need both.
My second point was around our “awareness” and “acceptance” as an industry of our shortcomings. The FSA was very clear about why it felt it necessary to draft the original RDR paper but when I meet people within the industry who run businesses, “it never applies to them”.
The “sustainability” point alone is key to our future. If we do not accept the signs or, worse, choose to ignore them, we will not fully benefit from what opportunities the RDR creates for us.
Jon Everill is group proposition director at Thinc