David Ferguson: Advisers finally get control

Some of it has been good, some of it bad and some of it has even been deemed unnecessary.

But whatever else the RDR has achieved, it has prompted the trend for advisers to become more economically aligned to their clients, rather than the providers. This is the model we have been campaigning for since day one. Now, advice is essentially the product – this is quite a shift from what advisers have been used to in the past as it essentially puts them in control.

The client solution, which once was in the hands of the life companies, is now ready and waiting for advisers to build. And rather than be remunerated by a life company, a fund manager or a legacy platform for distributing their stuff, advisers and their clients are able to agree a fair price for assembling the components that will deliver their financial objectives. It makes me very happy that after 30 years or so of arrogant encouragement to sell one company’s products over those of another, advisers and their clients have the power to call the shots.

Of course it sounds a bit too good to be true and as you would expect there is a large ‘but’ coming. What I have said above is completely correct unless you happen to be using a platform which seeks to introduce bias into the advice process by offering so-called special terms on the funds of certain ‘preferred’ asset management groups. This sort of thing can be dressed up in a variety of ways: ’having conducted extensive research...’; ’scale allows us to negotiate better terms’; take your pick. But the obvious reason for any of these platforms to do this is to encourage advisers to direct their clients’ assets in such a way that the platform makes additional margin on those assets.

In the most ridiculous example I have seen so far, one rapidly emerging wrap is offering the platform for free if advisers invest the underlying assets in the funds of the platform operator’s parent company. This is completely absurd in my opinion. As I understand it, advisers can have the platform for free as long as they are willing to put aside their own fund views. The cynics among us might see this as a devious ploy to gather assets ahead of the RDR, secure in the knowledge that whatever the reregistration project delivers, it will be some years before moving clients en masse between platforms will be easy and efficient.

This is exactly the sort of murky behaviour that has caused the lack of trust this industry has become famous for and should be desperately trying to get away from. As I have said many times before, the trust this industry needs can only be gained through true transparency and openness and this proposal appears to fly in the face of that.