IFA Chris Robertson has been an adviser at Dundee-based Findlay Financial Services for the last 10 years, but he admits that 2012 was his toughest year yet as he prepared for the Retail Distribution Review.
The first hurdle of getting RDR-ready was getting level four qualified, Mr Robertson said, referencing the “sad” case of a friend and peer that continues to struggle to pass his final exam.
“If we didn’t have the qualifications then we couldn’t open the door on 1 January 2013. There’s a long-standing pal of mine that just can’t do it - he just can’t get his last exam.
“We are trying to help him out with questions and test papers but he just cannot do it. He is a good guy and it’s quite sad when you come across a situation like that.”
Mr Robertson was qualified on time but, by his own admission, it was tough-going as he did not begin the process until January 2012 and had to squeeze his studies into a single year. This would have had a knock-on effect for clients, he admits, but did not cost the firm any customers.
“There were two of us in the company that had to start from scratch. I did RO1-RO6 in one year, which was heavy going. Obviously we were working at the same time as studying.
“I suppose with hindsight we may have left it to the last minute but we got there in the end. We just upped the working hour day to 24 hours. I don’t know how, but it worked.
“I am not saying the clients would have had the best service in the last year but we didn’t lose any clients as a result of it.”
Progression
Now that the qualifications have been achieved, though, Mr Robertson is keen to go further and he believes his firm may seek to push all advisers to go chartered in the longer term.
Findlay, an independent financial services firm that is affiliated with an accountancy practice, was formed as an off-shoot of this in 1998.
I suppose with hindsight we may have left it to the last minute but we got there in the end. We just upped the working hour day to 24 hoursMr Robertson thinks its relationship with a chartered firm may prompt advisers within Findlay to attain level 6 qualifications and it is something that Mr Robertson says he would like to achieve.
“We have got one chartered IFA at the moment and I am hoping to start later this year.”
The business has also changed it’s approach to charging, with fees being introduced in a “my way or the highway” approach in a departure from its previous stance where it offered fees as an option.
“Going forward, for brand new clients, I don’t think it will be an issue to charge a fee. We will say that’s the way it works and you can either take it or leave it and, if you go to another independent in the UK, arguably their system will also be the same.
“As a retail client coming to UK financial services for the first time, this is the ‘new deal’ if you like and it is take it or leave it. Existing clients are completely different as we have been doing quite a bit of fee business over the years anyway.”
Worries
If this does not worry Mr Roberston, other issues identified in the early post-RDR world do. In particular, he thinks a big issue in the current market is the way in which providers are operating with regard to legacy and ongoing charges.
“I might be wrong here but I have not come across two providers since January who are dealing with this or interpreting the rules and regulations the same at the end of the day. Everybody has their own take on it, everybody has their own approach to it and that is where we are having complications.”
As an example, he cited the way in which Legal & General and Standard Life both deal with topping-up an existing onshore investment bond.
L&G gives client an extra allocation to the client that would have been paid as commission in the pre-RDR world. According to Mr Robertson, the client is financially in a slightly better position because of this allocation.
However Standard Life does not give extra allocations, telling FTAdviser that they have always funded the trail commission that was paid.
“This may sound slightly cynical but I think that some companies may be using the RDR as a reason for not paying commission nor not paying extra monies into products and therefore keeping it themselves. This doesn’t affect new clients, just older ones.
“We all know trail commission is switched off, but where is it going if it is not rebated back into the product?”
Mr Robertson, like many advisers, wonders what the future holds for the industry but he does predict that it will be “much smaller” in the next few years as far as providers are concerned “but that may be a good thing”. He also worries about an often mooted subject: how low value clients will get advice.
“Platforms are dominating, there is no doubt about that, but I do worry about the bread and butter, as we would call them. Going forward, it means that IFAs will have to decide whether they want to continue dealing with that person or do we want to drop them.
“But that is easier said than done at the end of the day. If you have dealt with someone for a number of years, it’s not easy and not nice to say to someone that you can’t deal with them anymore and the easy way out of that is you will continue to deal with them but probably not earn too much.”
