Betteridge’s law of headlines states that any taster for an article ending in a question mark can probably be answered with the word 'no’. Some of you will already have said “No” even as you clicked on the headline of this very missive.
But before you write off this week’s news round-up and begin planning your weekend, I would like to make the case for why at the very least this particular question deserves further attention.
This morning (6 June) we led with a story based on a report produced by Barclays Capital, which claimed in the compliance-driven and resource-intensive post-2013 world IFAs are moving up the value chain, with a “cut-off” for face-to-face, full service advice now probably £150,000.
Amidst the responses on Twitter was one IFA that said, for his firm at least, it is even higher and sits at around £250,000 in assets.
For reference, the FCA suggests a ‘high net worth’ investor has around £100,000 in investible assets, while most of the discussion around the Retail Distribution Review advice gap has centred on an assets threshold of around £50,000.
Now that is not to say there is no advice available for those at the other end of the vertiginous savings scale: Barclays argued the sort of automated models that the FCA is currently consulting on would take hold, while the aforementioned Twitter IFA simply referred to ‘restricted advice’.
This last in itself opens an interesting second avenue to the debate on fees and affordability of advice.
Barclays said IFAs are now charging on average ongoing rates of around 1 per cent, which is double the assumed average pre-RDR.
According to two independent network chiefs around whose outspoken opinions we crafted a provocative blog post this week, restricted advisers should charge less than IFAs as they offer a less comprehensive service.
The piece sparked quite a debate, with some restricted readers railing strongly against the views espoused by the two (admittedly biased) commentators, while a few IFAs signalled that, yes, they do think they are worth more.
So what do you think? Are IFAs going to become a service for a smaller number of richer clients, charging higher fees for a more bespoke service, while restricted advisers offer more centralised and automated propositions to low and middle earners?
And if you are still tempted to say no, give us a few words of wisdom to explain why.
Protecting protection
In other news this week, we reported yesterday on a major study which has laid bare the scale of underprotection in the UK, revealing that half of all homeowners in the UK have no life insurance, while less than one in five and one in ten have either critical illness or income protection.
To make matters worse, the Scottish Widows study based on research carried out by YouGov among more than 5,000 adults, found mortgage holders represented the bulk of protection customers, accounting for 75 per cent of critical illness and 69 per cent of income protection policies in force.
A separate YouGov study carried out on behalf of Friends Life in the first quarter of this year revealed of more than 2,000 people surveyed only 4 per cent have income protection, 7 per cent have critical illness cover and 23 per cent have life insurance.
What is the solution? Some, including our own education editor Emma Ann Hughes and Canada Life, believe we should have a semi-compulsion to take out protection similar to the way auto-enrolment works for pensions.
It is an idea at least worth considering.
Mas attacks
Poor old Money Advice Service; it can’t do right for doing wrong.
This week it launched what was an ostensibly concilliatory consultation in which it admitted it had not done enough to direct people to advisers and proposed the creation of a specialist retirement advice directory to help improve matters, especially in light of the Budget changes.
But it suggested that it would establish a prescribed criteria for advisers to appear on the free directory, a move that the Association of Professional Advisers suggested was quasi-regulatory and was likely to make the whole endeavour unattractive and bound to fail.
The Treasury finally last Friday announced the independent review of Mas, to be led by Christine Farnish, previously chief executive of the National Association of Pension Funds.
This is an extremely important assessment of what is an expensive, but also critical service.
Most would suggest it has lost its way, and Treasury select committee chairman Andrew Tyrie has demanded even its statutory status is reviewed.
Many will be watching this with interest.
Hornbuckle hullaballoo
Hornbuckle was once again in the news this week over its poor service, after Graeme Mitchell, managing director of Galashiels-based Lowland Financial, wrote to Hornbuckle Mitchell chief executive Phil Smith out of “sheer frustration” over its “dire” service.
It has echoes of a similar story last month in which FTAdviser reported Hornbuckle’s decision to cancel an adviser’s agency after she complained too many times and too vociferously over its poor service.
Moreover, if the comments are anything to go by, neither of these cases is isolated.
Hornbuckle has a lot of work to do - but maybe it is not alone.
Claims chasers rapped
And finally this week, advisers will have been cheered to see the Ministry of Justice’s Claims Management Regulator step in to rebuke those firms in the sector that present their services as akin to advice, claiming to offer, for example, full ‘financial reviews’.
Looking at the comments, the only problem is that most don’t believe these interventions are enough and that tougher action is needed. Watch this space.
