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Where IFAs dare

It&#39s a bit daunting being “a lone voice”, as Aifa was described in Money


Marketing a couple of weeks ago. I ordered a tin hat and started referring


to my office as the bunker.


Now it appears we may not be quite as alone as was thought. There is a


consensus among industry bodies that polarisation in some form needs to


stay. It is more a matter of nuance and emphasis than deep-rooted


disagreement.


I make no apologies for taking a robust stance. It is for those who


advocate change to come up with a cogent and well-argued justification.


I do not believe that the Office of Fair Trading report constitutes that


case. I also believe that the argument must be focused on the needs and


concerns of investors, not the convenience of particular types of operator


within the market.


There has been too little said about the costs of change. All change has a


cost. In the case of changes to polarisation rules, whether radical or


fiddling, the costs will fall not just on advisers but also on providers


and regulators.


I have not seen any estimate or even guesstimate of what those costs will


be. Some will be direct, such as the costs of restructuring distribution


channels. Some will be indirect, for example, revised regulatory


arrangements to cope with the problems of a market where there is less


clarity about the status of advisers.


These costs must be spelled out, analysed and agreed before a proper


discussion and cost-benefit analysis can be undertaken. Change should


follow such an analysis, not precede it. Let it also be remembered that the


costs of change will ultimately be borne by the investor.


Then there is white labelling. Now there&#39s a paradox. In one part of the


regulatory forest, people are slogging away to produce comparative


financial information. They are drawing up tables and analysing what


information is needed to allow empowered consumers to make informed choices


(not my clich&#233).


I am a believer in financial information. It will lead to better-informed


conversations between advisers and clients and it will reduce the risk of


clients finding they have something that does not live up to expectations.


I do not believe that extra information for the consumer will


disintermediate (ghastly word) the adviser. All the evidence suggests that


a professional who guides an individual through a mass of information


becomes ever more necessary.


But when it comes to the identity of the product being purchased, it


becomes perfectly acceptable to conceal the identity of the provider


underneath a white label. Shurely shome mishtake.


There are fundamental changes sweeping through the marketplace. If there


is wholesale restructuring of polarisation, will the consequent drive for


share of distribution – and the dislocation to client relationships which


will undoubtedly ensue – bring the market into the brave new world quicker


or will it be a brake on the sensible evolution of businesses to cope with


new challenges.


For the moment, I pose the question. But it needs to be answered before


fundamental decisions are taken and I know where my intuition points.

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