I thought I would check back and see what was occupying my mind five years ago. I was still advising then so some of the more practical concerns of the IFA business owner were uppermost in my mind: Isa administration (abysmal). How advisers and clients were compensated for provider mistakes, and the time taken to correct them (flowers do not pay the bills). Sipp administration (running different adviser and provider views of clients’ portfolios is plainly wrong). Advisers should be called professional financial advisers (unless they are general advisers or primary advisers).
The retail distribution review was just starting to get major airtime, and then the FSA reviewed use of wraps, then reviewed levels of regulatory capital, and then reviewed the use of multi-manager funds, in particular the costs of this particular approach to investing.
It strikes me that not a lot has changed. Are we all living in this financial services equivalent of Groundhog Day? Perhaps not the same day every day but, based on the evidence I have managed to pull together, the same five years every five years?
The words may change but everything else seems depressingly familiar.
The debate about the uses (and abuses) of multi-manager funds now replaced by a debate about the uses (and abuses) of passive funds. Delete wrap, replace with platform.
We are still talking about firms disclosing the costs of their investment solutions and now enforcing ever-higher levels of transparency in funds, platforms, and adviser charges in the hope that disengaged clients will one day take an interest in how much of their money they keep and how much goes to all the other parties to the advice process.
We are still talking about how best to deliver investment advice to clients. Previously the discussion was in-house or use of multi-manager and discretionary portfolio services, now we outsource to centralised investment propositions, model portfolios, and argue on active or passive or a little bit of both.
We are of course still talking about RDR and we still debate what we should call financial advisers, or financial planners.
Some other subjects have not changed much. Cost and availability of professional indemnity insurance. All advisers need it, few really benefit from it. Does it pay out when it is needed? Why is the market so dysfunctional, and how can we make it better?
Cost of regulation: going up then, and now we have the FCA and the costs’ fallout to work its way through the system.
The costs of the Financial Services Compensation Scheme: going up then, going up even as I write, and going to go up even more as Arch Cru and other liabilities hit, not only the firms directly involved, but every advice firm.
This little retrospective tells us something: something has to change – and a new advice regime and a new regulatory regime could give us just the right opportunity.
We are of course still talking about RDR and we still debate what we should call financial advisers, or financial planners.Gill Cardy is managing director of the IFA Centre
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