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What Advisers Are Saying: Indy Vs restricted

Estragon: “Nothing to be done.”

Vladimir: “I’m beginning to come round to that opinion.”

I attended the excellent Winning Advisers event last week, with key decision-makers from some of the top advisory business. During one session, weighing up the merits of independent v restricted models, I couldn’t help but think of Waiting for Godot, Samuel Beckett’s absurdist play, in which the protagonists, Vladimir and Estragon, wait endlessly and in vain for Godot.

In much the same way, we are an industry at some-what of an impasse. There is consensus only on the level of misinformation doing the rounds and many business leaders are waiting for greater clarity before they feel able to commit.

Yet, as we know, the FSA is not and will not be prescriptive in its approach. This won’t change. It is why waiting for a clear set of rules and definitions is a bit like waiting for Godot. Sorry to ruin it for those who have not seen or read the play, but he does not show up! (It’s not so much a holiday read anyway).

Dictionary definitions of paralysis describe a loss or impairment of the ability to move a body part, usually as a result of damage to its nerve supply. Having encountered a fair few frayed nerves across the industry, could the level of inaction have more to do with fear than information (or a lack of)? And with good reason – Interpretation is required, yet advisers fear reprisals should their reading be deemed (retrospectively) wrong. Which way the media blows is a big concern, given the power that it wields to influence consumers one way or the other. Advisers are also keen to distance themselves from those restricted-model businesses that have only their shareholders’ interests at heart.

Starting with how the media may respond, with what the FSA might do retrospectively or what peers you may or may not be associated with is understandable but unhelpful. And a bit back to front if I may say.

What kind of a business are you or do you want to be? What do your clients value? What, ultimately, do you stand for? These are the most important questions. Be clear on what you believe and choose the best way of delivering your promises (while, of course, ensuring consistency of process and a clear record thereof).

The firms that can answer these questions clearly, concisely and compellingly are those that will thrive.

Phil Wickenden is founder of So Here’s The Plan

All interviews conducted with QCF level 4 qualified advisers and above.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. John Blackmore 3rd May 2012 at 2:18 pm

    Adviser and Regulatory obsession with the word “Independent” has been largely responsible for 25 years of wasted regulation. With IFAs making such a fuss about the “Independent” advice they give, as opposed to the nasty sales practices of others it is hardly surprising that regulators have made the mistake of trying to regulate the “advice” process when all along they should have been regulating the Products.

    At the end of the day almost all of the damage has been done by the product – advised or sold making little if any difference.

    If the FSA decide to enforce the new definition of “Independent” not 1 in 10 will qualify. Not that the majority of clients will really care anyway.

  2. The advice given by a “tied” adviser and an “Independent” adviser may be identical.

    However, where it leads to recommending a product the CLIENT is likely to perceive the Independent adviser as preferable to the Tied adviser for the simple reason that there may, in the clients mind, be a better performing & /or cheaper version of the product available in the market but not available to the Tied adviser.

    This concern, plus the knowledge that an Independent adviser can provide continuing advice on their existing portfolio wherever invested, will always add value to the Independent title.

    After all, many SJP advisers spend a significant
    amount of energy pusuading clients that, as they appoint the “best of the best” fund managers, they are as “independent” as an IFA.

    Don’t they?

  3. Re John Blackmore’s comment, what a breath of fresh air. Why hadn’t this been considered before, surely it is the product, rather than the adviser that should be regulated. Why should advisors be penalised for the failure of mis selling of “unregulated” products, why can’t the FSA sign off a pension transfer, issue wealth warnings on structured products, allow the marketing of certain products to “sophisticated” investors only. There should be a campaign for the FSA to regulate products only with the sale of any unregulated product forbidden to IFAs. Too sensible obviously.

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