I am a big believer in putting the ‘personal’ into good old personal finance. It explains why over the years I have railed against bank, building society and post office branch closures as the country’s financial services industry constantly persuades us to conduct all our money matters on the internet.
Some of you, no doubt, will accuse me of being a Luddite (as opposed to being an ex-Loughbrite – a Loughborough University alumni) but I am a big man (even bigger after New Year Eve’s excesses) and I can take the criticism on the chin. So give it to me, brothers and sisters – on the internet, of course.
The lack of personal in personal finance has attracted my attention on two fronts since watching the magnificent New Year’s Eve firework display from my rainswept balcony in London’s Docklands while drinking Lanson champagne (thank you Lansons communications).
First, I have been doing a lot of work in recent days about the growth in ‘copycat’ government websites that promise to process your driving licence renewal or passport application. Nothing wrong in that – the sites are perfectly legal – but they charge an arm and a leg for what is little more than printing off the details you have provided them with on the web.
Most people do not even realise they have used a scam website until the DVLA or the Passport Office tells them the fees they have handed over to the operator of the website are on top of the charges levied by the government agency.
Thousands of people are being duped by these impersonal websites every week – I have the mailbag to prove it. But if they applied for a passport through their local and personable post office they would avoid such scams. One nil to the Luddite.
Second, New Year’s Eve, spent in the wonderful company of a couple of IFAs (or financial planners as they would like to be known) also gave me time to ponder on the shrinking – and very personable – independent financial adviser sector. An industry one year on from the regulator’s implementation of RDR – and one that has seen the number of retail investment advisers fall from just less than 36,000 in the summer of 2012 to 32,690 in August last year, and no doubt fall again when the FCA updates us.
Let us not beat around the mistletoe here. IFAs are by leaps and bounds the best purveyors of personal financial advice in the country (you know that but I like to stroke your egos occasionally, especially when the glad tidings of Christmas still linger in my system).
One welcome outcome of RDR has been the widespread abandonment of ‘advice’ in the country’s bank branches. Although the advice in this instance was always delivered by a person, it was thoroughly impersonal – and inappropriate – in its delivery.
Of course I use the word ‘advice’ in its loosest context because ‘advice’ through the bank branch networks was actually nothing more than ‘hard sell’ or ‘mis-sell’ – as bucketloads of payment protection insurance and other useless policies were heaped on unsuspecting customers. Good riddance to bank financial advisers, I say.
So is the world of IFAs better for the introduction of RDR? In the eyes of the regulator, it certainly is.
Most advisers now possess more qualifications than leading neurosurgeons, proving in the regulator’s eyes at least that those still in business have the knowledge and professionalism to give independent financial advice a good name.
And of course that dreadful thing called commission is in abeyance, removing that sin to end all sins – commission bias.
Yet I am not so sure that RDR is the “game changer” and “force for good” that Daniel Godfrey, chief executive of the Investment Management Association, claimed it is.
The FCA’s thirst for qualifications has brought into the industry newbies who pass muster but do not have the people skills to make good advisersI doubt that qualifications have made many long-standing practitioners of financial advice better at their jobs (most of the stuff learnt for the exams is soon forgotten and is of questionable value out in the real world). And I also suspect that these new qualifications have not resulted in one ounce of new business coming their way.
In fact I would argue that the regulator’s thirst for qualifications has brought into the industry many newbies who on the one hand pass muster with the FCA but who on the other hand plainly do not have the people skills to make good advisers.
Certainly I would rather deal with a long-standing personable adviser who knows the business inside out than a rookie who can work out without the use of a calculator the future value of a £100,000 fund in 20 years’ time if it benefits from five per cent growth a year – but when it comes to dealing with real people with real financial issues to address is sadly lacking.
And before you ask, I know the power of the new kids on the block worries many advisers who fear their industry’s reputation may be harmed as they are given the regulator’s blessing to advise away.
Call me a cynic but I am not so sure that we now have a better financial adviser industry in place than we had before RDR.
Walls of framed qualification certificates are no substitute for the personal financial advice offered by well-lived, likeable and consumer friendly advisers.
Jeff Prestridge is personal finance editor of the Mail on Sunday
