‘No smoke without fire’: Bob Woods, Mattioli Woods
Mattioli Woods chairman talks DFMs, Sipp capital adequacy, the euro crisis and the advice industry as a whole.
The views of Bob Woods, chairman of Mattioli Woods, will not make for comfortable reading for much of the financial services sector, given his general dissatisfaction with service standards in the industry and his belief that “very few” organisations meet the demands of today’s clients.
“Most clients we come across, particulary if they are older, say they haven’t been well-served by the financial services industry.
“Some of the criticism is unfair, but there is no smoke without fire. The banks haven’t exactly covered themselves with roses and there have been debacles in the big insurance companies, a chronic disappointment in investment performance, charging structures, you name it.
“People don’t feel they have been looked after particularly well. I don’t want to suggest it’s all terrible but overall the industry can only give itself a qualified success at best in meeting
According to Mr Woods, annual management charges actually motivate advisers to do as little as possible for clients in order to maximise profits
According to Mr Woods, what at-work clients are really looking for these days is a trusted adviser who works for a trusted organisation.
They have come to expect very high service standards and still want personalised delivery and online viewing and dealing facilities and for the advice to be as holistic as possible.
He said: “If you ask yourself how many organisations really tick all those boxes, it’s our contention that there are very few. It’s what the market has evolved to.”
Discretion is advised
Mr Woods also has strong views on the recent debates over discretionary management and other outsourced investment solutions post-RDR.
He should do, being as the regulatory paper that sparked the furore and that voiced concern over advisers “shoe-horning” clients into unsuitable one-size-fits-all services coincided with Mattioli Woods gaining permission to launch its own discretionary service.
Mr Woods says that he has “enormous sympathy” with the FSA view, although he adds that they “haven’t been especially effective in addressing their concerns”. In his view, it all comes down to the “billing models”.
“You have an enormous IFA sector, most of whom are smaller companies that have worked from a commission basis. Based on a commission model, it’s going to produce a bias towards products that generate commission, which isn’t helpful to the customer.
“Abolishing commission will be very helpful in making the industry more professional and with more integrity.”
According to Mr Woods, commission-based models make advisers naturally lean towards high-commission products, while annual management charges - which he says range from three-quarters to 1.5 per cent - actually motivate advisers to do as little as possible for clients in order to maximise profits.