Working in a profession and industry that’s responsible for securing the nation’s financial future means we can expect more than our fair share of government intervention and regulatory scrutiny. Over the last few weeks financial advice and long-term savings have yet again been placed centre stage with the outcome of the FCA Due Diligence Review, FAMR and now the budget. So, what is the impact and how are we preparing?
While FAMR does little to address the escalating costs and risks of delivering fully regulated advice to the mass market, it should be of great reassurance that neither regulator nor government feel the need to further reform the advice sector. In fact, when combined with a relatively anodyne review of adviser due diligence, it is my view that advisers have had as close to a glowing endorsement of their professionalism and quality of service as we are ever likely to see.
FAMR does provide more words of encouragement for so called ‘robo advice’, but in the absence of clear guidance and tried and tested models, the widespread application of these technologies in a D2C setting remains some way off. It’s our view that the greater and more immediate opportunity is increased automation and efficiency within advice businesses, freeing people to focus on clients with consistent repeatable processes in the background. Through developments such as the CGT scenario tool and tolerance-based portfolio rebalancing on the investment hub we are continuing to test and build out these capabilities.
Of course, there is a link between FAMR, robo advice and the budget announcement of the new Lifetime ISA. On face value, this is a new simple product solution more suitable for automation and easy transaction. However, we also know more choice often leads to greater complexity, which increases the need for advice. We are increasingly seeing advisers providing their services to family groups, where younger members can benefit from the purchasing power of their parents and grandparents. Many parents will want to ensure their children are well set up for purchasing their first home or just have a solid long term savings plan in place. I believe the Lifetime ISA will be a popular choice and we are keen to support it.
In setting out our plans for platform developments and the 2016 roadmap, I set the ambition that Standard Life Wrap would lead the market in the support for retirement planning and investment. It is now clear that the Lifetime ISA must form part of this picture.
My team are already analysing the best way to implement and integrate the Lifetime ISA into the platform and tax optimisation toolkit. I am determined to do everything possible to minimise this impact and our overall priorities remain unchanged, namely:
- Supporting the management of clients approaching and in retirement;
- Supporting advisers Central Investment Proposition
- Creating efficiencies in adviser businesses
David Tiller is Head of Adviser & Wealth Propositions at Standard Life