Are we a profession or an industry? It seems we cannot make up our minds, although to be fair we are probably neither. I recently attended a ‘rousing do’ where speakers talked of a ‘fledgling profession’ but in subsequent mingling started talking about the ‘industry’.
When it all boils down I think we are mostly shopkeepers. We are part of the distribution chain within the financial services industry. Up the chain sit manufacturers of financial products and down the chain are end consumers and purchasers. We sit somewhere in the middle fulfilling a shopkeeper’s role.
Some firms are supermarkets, stocking shelves with thousands of product lines from large manufacturers. Others resemble specialist retailers, offering varying degrees of guidance and advice before finally selling some high-end (and possibly niche) product. Relatively few firms make their living selling professional services independent of products.
For most clients it is the eventual product that justifies the advice, and thus the fee. If there is an advice gap it is because we are trying to emulate lawyers, doctors or teachers – and that has not been helped by the rhetoric from successive regulators over the years.
Now we have the Financial Advice Market Review (FAMR) with a ‘terms of reference’ that reads like an invitation to establish online financial shops, distributing products rather than advice. But the fact is, people aren’t flocking to online financial advice sites like Pension Wise in the same numbers that visit D2C platforms or comparator sites. If we are a nation of shopkeepers it is because we are also a nation of shoppers.
We might throw a few more terms into the mix, such as agency and intermediary, but our roles have long changed since we were ‘regulated’ under the law of agency, or we truly intermediated (dictionary definitions often refer to commission or similar). Simply trying to squeeze the entire advice sector into a neat compartment doesn’t work. The consumer base is fractured, and the largest segment – by population, though not wealth – is divorced from financial advice, both because of regulation and because the sector is divorced from selling things.
So what’s to be done? Well for starters we can contribute to the FAMR otherwise the policy wonks will stitch us up yet again. I constantly hear from advisers who say they knew all along that RDR wouldn’t work, and would disenfranchise most consumers, but when I ask if they have ever submitted a response to a consultation paper, the answer is ‘no’.
If there is one gripe I have, it’s that too few advisers and firms share their knowledge and experience through consultation papers. In 1986 we lost the opportunity to self-regulate, don’t lose the opportunity to influence.