Stephen Jones, of 75point3 in north Wales and this year’s winner of Financial Planner of the Year, tells us how RDR didn’t phase him and why asset allocation sounds like astrology.
I failed to get excited about the RDR at all. Over two years product providers were visiting me and it was all they ever mentioned. We’d been using explicit charging on pretty much everything for years.
I was getting worried that I wasn’t worried. I thought, ‘Am I meant to be doing something?’
There’s a financial pressure to go restricted. There’s quick money to be made if you go restricted. Even our compliance people, Bankhall, were trying to encourage us to. We didn’t.
There are certainly deals to be done with product providers if you’ll go with a restricted panel with companies. The networks have seen that. It was the pitch to us: if you do this, you’ll still be doing the same job as you’re doing now but you’ll get more money.
I didn’t really, and I still haven’t, got a clear understanding of what the RDR was meant to do for consumers. In what way were they meant to be better off?
I’ve seen some consumers that are worse off as a result of the RDR. Particularly those who have pension policies with some of the closed life offices.
If they want annuity advice, those closed life offices won’t pay commission to anybody. You’re talking sums of maybe £30,000 to £60,000, and these people are having to pay out of their own pocket for advice when there was cash reserved within policies to cover it.
Advisers that have remained independent are on board with the RDR. Once restricted, they’re not necessarily caught with the same issues.
Some wealth managers are a bit ‘hush hush’ that they’re restricted. They paint it as ‘we’re the manager of the managers’.
The minimum level of qualifications is sufficient. The people that are doing the exams and work for us now are not finding them to be easy.
Over the years it’s really racked up from ‘nice smile and hair brushed’ to you’ve got to be professionally qualified. The industry has got a better image in the eyes of the public now. It’s a gradual move to professionalism.
There is a herd mentality. Everybody seems to be doing the same thing: asset allocation, etc. It all sounds the same.
Once you get a group of companies and people all doing the same thing, when something goes wrong, it’s going to affect a lot of people. Whereas if you’ve got a lot of different people with different business models, it doesn’t necessarily affect everyone.
Everybody’s talking the same language about asset allocation and all this stuff. Sometimes it sounds a bit like astrology to me. They’re all trying to predict what’s going to happen in the future based upon some little pictures of what happened 10 or 20 years ago. Everybody seems convinced by it.
We don’t believe a word product providers tell us at face value. Any research we’ve got to do, we do it ourselves. We drill into it and we’re not into the off-the-shelf scenarios.
We’ll see life office direct sales forces re-emerging. There are going to be millions of orphan clients with little policies floating around that these offices will want to service.
People are missing out on advice. Or they’re paying a lot more for advice than they would have done. The type of people that it has affected are the ones that can least afford it.
The best thing about my job is we are trusted in this part of the world. You get consulted about a lot of things. You feel that in your own little way you’re helping with the wealth of the people in North Wales.
In 2007, HSBC was offering a phenomenal mortgage. It was 0.29 above base for life. They wouldn’t deal with IFAs at the time. I sent maybe 15 people away to do it directly. They were gobsmacked because they knew we weren’t getting paid. It’s doing the right thing.
