IFA threatens to leave industry after regulator ‘bombardment’

Daniel Liberto

Robert Donaldson, who now works as an adviser for AFH Wealth Management after selling his firm, AG Financial Planning, at the end of last year, warned that increased regulation, though implemented to improve the profession, has proved unfavourable to everybody except the regulator.

According to Mr Donaldson, it has become impossible to keep regulators and clients satisfied and to successfully run a business with so much paperwork to be completed.

He said: “This is hopefully the year in which I will exit the business after 30 years. My decision to sell was made because the job is not getting easier with CPD, regulation, markets up and down and the volume of paperwork that we have to provide is too cumbersome.

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“To keep clients and the regulator happy is nigh on an impossibility, so who is better off for all the change? The only person who suffers in all this is the client. They are bombarded with paperwork, no better protected for it, it’s just covering oneself.”

Besides blaming the regulators for worsening client experiences, Mr Donaldson also accused providers of making “constant mistakes” that repeatedly hurt the end-user.

The frustrated adviser, who plans to leave the profession at some point this year, also claimed that the growing advice gap that followed the RDR has made his and his peers’ jobs tougher, both financially and out of a sense of care for those less wealthy.

He said that the average person will no longer be able to afford financial advice, which he found particularly concerning given that the need for financial protection and pension benefits “is becoming even greater”.

He added: “Mr and Mrs Average are going to find it incredibly hard to obtain financial advice in the future, as they don’t have the money to pay the fees and they are the ones that need a little bit of encouragement and arm-twisting to do the things you know will stand them in better stead for the future.”

Without professional financial guidance Mr Donaldson predicted that most will turn to the internet for advice and payday lender services such as for capital, as opposed to taking out a £20-a-month savings plan and thinking carefully about their long-term future.

“The internet only encourages them to do what they feel is right, not what is actually necessarily in their best interests. They have no idea on saving, being protected or the pension time bomb that is ticking even louder for youngsters.”

Adviser comment:

Mark Osland, director of Surrey-based Formula Limited, said: “I sympathise with Mr Donaldson. The time spent on compliance is incredible. I do not see that anyone who fully understands current regulatory demands would set up an advisory business now – there are much easier ways of making a living. But, for the rest of us, this is our livelihood, and, like most IFAs, I am certain that my advice gives distinct benefits to real-world clients, post and pre-RDR. That is what keeps me going.”