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Standards body says RDR alone won’t make you professional

Standards body says RDR alone won’t make you professional

Financial advisers must apply the same quality standards to their business practices as they do their work with clients, or risk falling by the wayside, according to Standards International founder Michelle Hoskin.

Through her firm’s work in helping advisory businesses gain higher professional standards, she has found the biggest problem is that IFAs concentrate solely on advice and forget they are running a business.

“If you only have your adviser hat on, you begin to create unnecessary problems, forgetting about the basics of any business - human resources, administration, planning for growth.”

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Ms Hoskin said that advisers must begin to practice the financial prudencey that they preach, stepping back to get a clear vision of their firm’s strategy, with proper policies and key deliverables, rather than just assets under management and turnover targets.

“It’s about good management structure, regular board meetings that discuss strategy and implementation, with good senior staff communication; advisers forget their best client is their own business.”

Standards International is an accredited certification body specialising in the assessment and certification of financial planners to ISO 22222 level and financial planning firms to BS 8577 standard.

The BS 8577 sets out a framework for managing an adviser firm and effectively supporting the provision of planning services.

The standard was partly written by Ms Hoskin, along with other financial advice specialists and professional bodies, including the Chartered Insurance Institute, Personal Finance Society, Which? and the Institute of Financial Planning.

Meanwhile, the international ISO 22222 standard covers the ethical behaviour, competences and experience required to be a financial adviser, backed by the Financial Conduct Authority’s Treating Customers Fairly mantra.

While many advisers and firms are working towards both standards, Ms Hoskin admitted that less than 60 have yet received full certification.

“The RDR helped drive adviser qualification levels, but those don’t make you professional, for advisers to be regarded as such they need to get their own houses in order, creating sustainable, growing businesses,” she stated.

Ms Hoskin is one of a few progressive thinkers who have become regular speakers at ‘Illuminate’ events organised by adviser platform Nucleus, aimed at improving standards among member firms and the industry as a whole.

Adrian Murphy, partner at Nucleus member firm Murphy Wealth, told FTAdviser that it is important that the evolution of adviser firms takes them from a group of individuals into proper businesses.

“Quite often good advisers aren’t necessarily good business owners. Adopting a structured approach to the business as a whole, with the right processes in place, is essential for future success.

“Advisers firms need to be as good if not better at this as any other business.”