Advisers must speak up for the role

John Lappin

The return to prominence of Chris Cummings, director general between 2003 and 2010 of what was then the Association of Independent Financial Advisers, reminds me of one of the organisation’s best initiatives: publishing a manifesto for advice in 2008.

Mr Cummings will, of course, soon be heading up the Investment Association, and will have new policies to consider.

He’ll face a diverse set of challenges that, I think, are mostly about convincing policymakers – and the growing band of passive-only advocates – that active fund managers add value for money.

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In many ways, those left with the task of advocating for financial advice nowadays ought to have, comparatively speaking, a much easier task. That’s because, put simply, adviser clients (or at least those who take heed of that advice) tend not to end up poorer as a result.

This is a world in which regulators continually discuss outcomes. Yet at times it appears they fail to appreciate the much-improved outcomes people achieve when they talk to someone who encourages them to save and invest.

Even this government, though it generally views advisers more favourably than the previous administration, tends to only pay lip service to the benefits of advice and we are yet to see this translate into action.

One wonders whether there is a way to ensure adviser numbers can reach a certain level – and the same goes for the number of people who access advice. There are concessions to come around training, though these do seem designed to help the big organisations.

And, of course, there is a renewed emphasis on robo or automated advice. There are plenty such services already in operation, yet it is interesting to note that in the US this has often taken the form of transplanting a robo-advice service onto a fund firm’s existing offer – usually involving low-cost, passive funds.

This doesn’t strike me as the kind of holistic advice that can be found on these shores. Might there not be a direct read-across from the growth of the US market after all?

I have also said in the past there are details in the FAMR that could hugely benefit advisers, not least those regarding the structure and funding of regulatory bodies. But all of these need further work.

It strikes me all of this underlines why those who believe in advice must keep making the case. The story can easily be a compelling one – advisers have been successful because they help make their clients more successful, too.

But I think we also need a healthy sector to set standards, to continue to research best practice – in terms of both investments and advice in general – and to keep driving providers and fund managers of all types to improve their services.

That way, whatever the strength of the robo-advice sector, we will have a gold standard to compare it with.