Forget RDR, IFAs must shout about the value of advice
Advisers and their representatives need to promote the fact that advice is worth paying for.
In little over five months’ time, when the glorious London Olympics’ opening ceremony is only a distant memory to be cherished for ever more, a new dawn will emerge for purveyors of that fine art called independent financial advice.
After much debate, argument and head scratching, the Retail Distribution Review will be enforced and the financial advice landscape will be a better place for it. Well, that is what we are being led to believe. Commissions will be replaced by fees, transparency, integrity and honesty will prevail and the general public will never have to doubt an adviser again. Advice utopia is just around the corner and everyone – the regulator, the adviser community and the general public – will be able to live happily ever after as if they are all starring parts in a Mills & Boon romantic novel.
Maybe we will get to this financial advice land of milk and honey but if industry experts are to be believed, it will not be without its big casualties – on both sides of the fence.
There is no doubt that a financial advice black hole will emerge as those advisers that survive concentrate on high net-worth individuals
Surveys still suggest that up to 30 per cent of financial advisers could give up the ghost before the RDR is finally embedded into the regulatory framework. Some advisers cannot see a viable business future post-RDR, others are in fear of taking exams after a long and distinguished career, while some will see the review as the final straw in a long line of final straws that have included onerous compensation levies and the outrageous castigating of advisers in the Arch Cru scandal by the FSA.
And there is no doubt that a financial advice black hole will emerge as those advisers that survive concentrate on high net-worth individuals, leaving many clients as ex-clients and disenfranchised from advice. Many of these consumers who disappear into the advice abyss will have no choice but to cling onto the coat tails of the Money Advice Service for their financial tidbits. Perish the thought.
To date, the game changer that is the RDR has rarely escaped the pages of the financial trade papers. Past editions of Financial Adviser have covered assiduously the consequences and implications of the review – and rightly so.
Yet the RDR has not really been an issue for national newspapers. Why? Because personal finance journalists like me prefer to write about things that the public can act upon immediately rather than about matters that are on a distant horizon. Indeed, we wrote about the value of financial advice in last week’s Financial Mail but never once referred to the RDR. We felt it would confuse our readers and be of no interest.
The regulator, the architect of the review, has also seemed reluctant to shout about it. Although it has published a flimsy consumer guide on the review, it is currently buried away deep in the bowels of its website.