The firm has not taken provider determined commission on investments for many years, as it was already working on a customer agreed remuneration basis.
“Adviser charging is effectively the same thing under a new name so it has been business as usual.”
The move to qualifications was also smooth as all 15 advisers were level four qualified.
“We also have a number of chartered and certified advisers and even some ‘fellows’ of the Personal Finance Society. Our aim is to encourage all our advisers to achieve chartered and or certified status before 31 December 2014 because we believe the minimum qualification required to remain independent will rise to level 6 within the next couple of years.”
However, the RDR did force the firm to embark on marketing its brand as it had to revisit documentation and literature to ensure it complied with the revised regulator wording.
“We decided to refresh our brand, including changing our logo and website and we produced a new brochure about the company and our service, including taking the decision to publish our pricing in the brochure to be as transparent as possible.
“We’re now currently working on a new brochure aimed at professional advisers working in the personal injury and clinical negligence market, i.e. solicitors including those acting as deputies appointed by the Court of Protection.”
Money Wise did not lose any advisers in the run-up to the RDR and has recruited two this year.
“We have no plans to be huge; we constantly strive to be the best we possibly can. It’s a journey. Our next horizon is to grow to 20 advisers ideally spread evenly across our 4 offices within the next 18 to 24 months.”
“Financial services along with the NHS have become political footballs in the race to win votes.”It’s a risky business
Mr Coury believes Money Wise’s per capita productivity is “above the sector average”, as despite the relatively low number of advisers, the firm’s annual income is around £3m.
He added that the firm runs a “tight T&C scheme” to constantly monitor the quality of the advice and record keeping, “which one has to do these days”.
The firm uses Bond Dickenson as its compliance advisers, file checkers and compliance auditors.
“They are probably more stringent than the FCA would be and there is very little tolerance. If something appears to be missing, it is like a fail. We have a paperless office so when things are missing, it might just be that someone has not attached something.
“By having a very, very strict file checking regime and an annual audit by Bond Dickenson, we are getting a very high level compliance service.
“They check around 10 to 15 per cent of the files and if we get any reds, i.e. any fails, then every single file is checked and the adviser has to have pre-approval. It’s very rare to get a red. But this is risky business.”
The firm also uses Threesixty for their online service, including “online information units” and software packages for pensions’ product research and analytics.
Like most advisers in the post-RDR world, the firm decided to be independent.
“We believe we recommend something because it is in the best interests of the client, not us. This is particularly important as most of our new business enquiries are referrals from solicitors and accountants. They prefer to deal with an independent firm and they like the fact that we are not only fee-based post-RDR but have been for a number of years.
“Our clients were completely un-phased by the whole thing [RDR], all they were concerned about was that we would still be there to look after them.”
Product providers are still adapting
When asked how product providers are adapting to the new regulatory regime, Mr Coury is complimentary of wrap platforms, stating they have “adapted well”.
“I’m guessing the product providers are having a harder time of it because: a) their IT systems may struggle to cope with adviser charging in many cases and; b) because advisers have turned predominantly to platforms to service their investment business.”
Money Wise uses several platforms, which the FCA was pushing for independent firms to do. Ascentric runs its discretionary model portfolios, which are managed by Brompton Asset Management.
“The vast majority of new investment business these days is written using platforms rather than traditional products, although products are still used in conjunction with the platforms as tax vehicles when appropriate, i.e. pensions, Isas etc.”
Fees should be based on success
Regulatory fees and PII costs are the firm’s main concern, as it is “impossible to budget for these things”.
Ironically, Money Wise has seen a £10,000 drop in regulatory fees this year and they are currently around £60,000, but this does not include the interim levy.
“Last year we got hit with a £43,000 interim levy and when this landed on our doorstep, all of a sudden our regulatory fees were pushing six figures.”
Mr Coury is also critical of the current way that the Financial Services Compensation Scheme levies the entire industry to compensate consumers for the failings of a minority.
He believes that regulatory fees and professional indemnity insurance costs should be driven by success as opposed to failure as the current systems where successful firms pick up the tab for failed businesses and products is unfair and beyond advisers’ control.
“I haven’t sat down and thought of a model of how that could work but it does seem kind of paradoxical that there are fewer firms than there were 10 years ago and firms that still exist are the ones that, in the main, have stayed successful but we pick up the tab for all those firms that have failed and it does seem… it just leaves a bit of a sour taste in the mouth doesn’t it?
“It doesn’t feel right that you are picking up the tab for someone else’s mistakes. I don’t really know what the solution is, other than the product levy.”
Two years ago it was mooted that the FSCS could be funded by levying financial products, a move which FSCS chief Mark Neale reportedly labelled a “tax on consumers”. The FSCS said that a product levy structure, which was supported by advisers and trade bodies, would have flaws.
Mr Coury was one of the supporters of the product levy, highlighting that if £10 was slapped onto every policy sold that could have gone into a pot for product failures.
“As again it seems a shame that when products fail, it’s the adviser, that in goodwill recommended the products and is now picking up the tab,. You know, they didn’t design the products, and it wasn’t their fault that the products failed but they get the blame for not doing correct due diligence.
“Well actually that is nonsense. I would suggest that an adviser would have done due diligence and would have relied on the information that was provided so it does seem very harsh and it’s put a lot of people out of business.”
Mr Coury added that “knee-jerk political statements” also top the concerns’ list.
“Because politicians keep meddling with tax reliefs and rules surrounding financial services, there’s always a concern that something that’s perfectly acceptable today may not be so in a few years time.
“I hate the fact that financial services along with the NHS have become political footballs in the race to win votes.”
