In particular he says that the FCA’s vision of an automated process represents a risk to adviser business models, particularly the lower value client.
I don’t think this is the case at all.
It is a widely held belief that the mass market is not being adequately serviced. Advisers simply cannot afford to service lower value clients; while I know many an adviser that gives ‘free’ advice on the phone or ‘free’ initial meetings, their business model would fail if this was expanded further.
Mr Lappin quotes FCA head, Martin Wheatley, as saying: “We have seen the concern that you cannot automate an expert process; that the expert process of providing advice needs four hours of research, two hours of face time and one hour of writing up, and frankly that is quite an expensive model.”
I agree with the tenet of Mr Wheatley’s comments: what we need is a model that advisers can use which shortens the advice service and makes it far more simplified as well as offering clients access to full advice if that is what is needed.
Well, Parmenion claimed this week that this is what it has achieved. On Wednesday (18 June), it unveiled at a Platforum event what it claims is the UK’s first fully online simplified advice service.
This is not a direct-to-consumer offering but is designed to support advisers to offer a lower-cost service to mainstream clients. Of course, the benefit for them is that it plugs into their own model portfolios.
The service is an online process taking clients from an initial risk review through to a suitability report, and it claims the initial process takes just 10 minutes. It said the software empowers advisers to condense a nine-hour advice process into a 45-minute meeting.
This model was two years in the making, but its timing to market could not be better. We have a FCA automated advice consultation due, which should make processes clearer to advisers.
Of course, what the industry now needs is more technology in a similar vein.
‘Visual’ pension guidance
It seems technology in our sector is really coming into its own. The Pensions Advisory Service, touted as one firm who could successfully the government’s ‘guidance guarantee’, told FTAdviser this week that it could deliver the guidance via ‘virtual’ face to face sessions for around £35 a session.
Tpas told FTAdviser that each pension specialist could deliver around 2,400 ‘sessions’ a year for this price, equating to £84,000 per specialist, so if it employed 10 specialists that would cost £840,000 for the year.
Now, earlier this week, the Association of Professional Financial Advisers, revealed it estimated an average cost of £36 per person to provide guidance, equating to a total industry bill in its “core” scenario of £7.2m.
It is encouraging that firms are thinking outside the box, and trying to keep costs low while meeting the government’s ‘guidance’ promise’. Furthermore Tpas added that there is a “minimum level of pension qualifications needed” to be a specialist.
While both staff at the Fos and the FCA have come under for refusing to reveal qualifications, it can only be seen as a refreshing change for a non-profit advice service to willingly say ‘yes we have relevant qualifications’.
Open Sesame
FTAdviser sister publication Financial Adviser reported this week that LSL Property Services is nearing the final stages of takeover talks with Friends Life to secure its bid for Sesame Bankhall Group’s mortgage network.
It’s little wonder that Sesame is offloading its mortgage network when you take into account its latest financial results. In March 2014, Friends Life announced that Sesame Bankhall had posted a £19m loss.
Surely if Sesame is making that kind of loss, Friends Life would be slightly crackers to keep it, but then again, who in the hell would buy such a loss making machine?
The big news that we are all waiting for - whether Sesame is for sale, or not, - has quietened over the last month or so since the big furor in the first quarter of this year.
Barclays Capital is currently conducting a strategic review of Friends Life’s IFA arm, and Friends Life told me today: “The strategic review is ongoing. We will update the market when it is appropriate.”
However, perhaps by moving to a restricted model, as Sesame announced at its conference in January, will be what is needed to bounce Sesame back to profit. Unlikely? Not as unlikely as England passing the group stages in the World Cup.
