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What advisers are saying: Risky business

Phil Wickenden Technical Area 200

Newcastle United’s infamous fan Keith “Beefy” Roberts (26 stone at his heaviest and having, on occasion, enjoyed up to 30 pints on match-day) will be able to ride out of St James’ Park on what business improvement company NE1 are calling “travel accelerators”, but which in truth amount to little more than fancy slides, if plans are approved.

Novel, certainly, if not ground-breakingly innovative or indeed necessary (though nor are iPads and they seem to have done alright). But, taking into account Beefy’s match day routine, there are certain health and safety alarm bells that I’m surprised the proposed introduction of playground apparatus have not sounded. But I’ll leave that to your imagination.

Newcastle have worked with the Royal Society for the Prevention of Accidents to ensure the plans adhere to safety controls and regulations. But can you truly legislate for Keith?

The recent closure of one well known execution-only intermediary business reminds us of the risk innovation necessarily carries with it, highlighting that a “Test fast, fail fast, adjust fast” approach advocated by Tom Peters won’t wash in such a tightly regulated area as the non-advised space.

And that’s what is holding back so many advisers. According to a recent poll conducted by PanaceaAdviser, only 10 per cent said they felt confident and were ready to seize the opportunities RDR has brought in. Given the regulatory risk involved in branching out into execution only and simplified advice routes this is perhaps unsurprising.

There are exceptions, like Nutmeg and Salty Dog, offering low cost savings strategies via regularly balanced portfolios determined by goals and time horizons, but many advisers are still in the process of figuring out just how these services will operate alongside their advice-based business models, and whether they are a risk (capital, time, regulatory) they are prepared to take given where they are in their life-stage (let’s not forget the average age of a financial adviser in the UK is somewhere in the mid-fifties).

Which is at it should be. Just because there’s niche in the market, it doesn’t automatically follow that there’s a market in the niche (however big it looks). But advisers should also consider the implications of complementary, non-advised business streams for the value of their business. Even if the timescales for making a profit on less affluent customers run further than your likely career horizon, it is worth considering that the value of a dying client base is far lower.

Phil Wickenden is managing director of So Here’s The Plan phil@soherestheplan.com

P Wickenden Quotes 7 March

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