You may have noticed the recent media coverage following the findings by Which? that high street banks and building societies are giving poor advice and recommending inappropriate investment products. A spokesman for Which? said: “Our investigation shows that the high street isn’t the best place to go for investment advice. If in doubt, consumers should always talk to an independent financial adviser.”
In fact, the regulators have been working with financial advisory firms of all hues over this for the last few years. Their objective being to transition to a more professional manner with higher qualification thresholds for advisers and the banning of commission based investment related sales being introduced from the end of this year. The fee-based approach that we as a firm have been developing for the last 12 years is exactly the model that our regulators are looking for firms to adopt and we are comfortable that our structure and the way that we work with our clients will not have to change because of this.
Many of the firms within our profession are struggling to come to terms with both the new qualification thresholds and a change to having open and honest discussions around remuneration structures such as those we have been having with our clients for many years. Because of this, we are expecting a great number of individuals, and quite a lot of firms, to leave our profession in the run up to the end of this year.
It is reassuring for me, as well as for our clients, to understand that we are very well placed to take advantage of these changes being forced upon others. In fact, Sam, who is training with us with a view to becoming an adviser in the future, should also be qualified by the end of this year. Sam’s authorisation will then further strengthen our adviser team, just at the time when we expect to see an influx of new enquiries as other firms desert their clients.
The pending changes (known by the regulators as the Retail Distribution Review or RDR) are designed to increase the level of professionalism and reduce the incidence of mis-selling, however, I fear that the banning of investment commission may not be enough. If fee structures emerge where large up front fees are payable in the event of a product sale, we are still no better off but, I suspect, some firms will take that route.
Our structure is such that, rather than being remunerated on the basis of product sales, we are paid for the ongoing service and advice that we provide which is a far more valuable proposition to our clients and we have no plans to change this.
As a firm, we now have the resources to service additional clients and should you know of family members, colleagues or friends that may not be getting the service that they should expect from their existing or past advisers, please do give us their contact details and we will be delighted to speak to them. With all new clients at outset we offer a no-obligation initial meeting as this allows us both to decide if we wish to work together before going forward.
In summary then, yes there is going to be a fundamental shift in how financial advice is provided and, for many individuals, they may lose their longstanding advisers. Our clients, however, are going to be sheltered from this turmoil and we are not expecting any major changes to our working practices or to the quality of our service because of the RDR. If you would like to know more or have any questions, please do not hesitate to contact us.