Your Industry  

Advice must shift from 'industry' to 'professionalism'

 

Regulation, robo-advice and a re-definition of what advice is are the biggest challenges to financial advisers over the next few years.

Nathan Mead-Wellings, director and financial adviser at Finura Partners, said there were "many things to contend with" but the greatest challenge facing advisers was a re-definition of what being an adviser means.

He said: "Let's take robo, for instance. Any adviser focusing purely on investments or the value-add through giving investment advice is, in my opinion, likely to struggle, or certainly leave themselves open to challenge, whether on a cost basis or functionality basis online."

Article continues after advert

He said the fear of competition from online investment sites should prompt advisers to do more around the investment advice proposition, such as how to articulate issues such as risk, volatility, estate planning and explaining tax allowances, which would make them stand our more.

By doing so, this would help protect advice firms so they do not end up facing too much competition from the likes of online propositions such as Nutmeg or Charles Schwab, which could look "sexy" or "cheap".

Moreover, financial advisers were having to take much more account of what their proposition is, since the Retail Distribution Review and Mifid II, and in the light of the incoming General Data Protection Regulation (GDPR).

As a result, Mr Mead-Wellings believed there might be a question over what firms' regulatory status actually was, and whether they really did what they claim to be doing.

He told Money Management's Craig Rickman: "I am interested to see whether the Financial Conduct Authority takes a look at [adviser's propositions]. I think because of all the [various regulations] it is becoming harder and harder and harder to demonstrate true independence. 

"If the regulator actually lifted the bonnet on the firms calling themselves IFA, I wonder how many would be working to the true definition of what an IFA traditionally was."

He also said the word "professional" was key. "Quite often we refer to ourselves as an industry, which is a big bugbear", Mr Mead-Wellings said.

He explained an industry makes something to sell, but a profession focuses on advice and on the needs of the client.

Mr Mead-Wellings added: "Too many people subscribe to the 'industry' model of thinking we are here to sell a product, a plan, a fund, a tax wrapper or a mortgage or a life policy,.

"So a huge challenge is the paradigm shift from industry to profession. Rather than being considered as someone product pushing I hope we would be considered 'up there' alongside other professional services for which people are happy to pay an hourly fee.

"If we get our profession, and the definition of this right, then people will see us in this same category."