Platform rules and adviser exits: the week in news

Platform rules and adviser exits: the week in news

As Tory candidates battle for the political top spot, this week’s news has been flooded with stories of drug taking, 'whose a feminist?' slurs and even electoral lies and court action.

Meanwhile platforms and the regulator have reared their heads once again in financial services headlines. It’s time for the week in news.

1 Advisers leaving

As many as 7 per cent of advisers and wealth managers in the UK could be leaving by 2022, according to a study from Succession Wealth, which found stringent regulations would serve as the main catalyst for the shift.

This comes in the heels of advice network Openwork finding the number of advisers would need to "grow rapidly" to meet rising demand from consumers, which currently sits at 71 per cent among under-35s, it found.

At the beginning of this year the Heath Report Three had already warned the delayed impact of the Retail Distribution Review could see one in five financial advisers leave the industry through planned retirement in the next five years. 

2 Rules backfire

Despite the Financial Conduct Authority encouraging advisers to use multiple platforms, the Mifid II rule requiring advisers to notify clients of a 10 per cent drop in their portfolio is putting some off using more than one, FTAdviser has learnt.

Philip Milton, who runs PJ Milton and Co, an advice company in Devon, and who is also a discretionary fund manager, said the problem is that the rule applies to the whole portfolio, therefore advisers need to look at the assets held on all platforms and manually calculate the overall drop when one part drops.

This applies to advisers who also act as discretionary fund managers and are therefore obliged to inform clients of such a drop in value.

Dedicated Mr Milton said he spent Christmas Eve 2018 writing to clients to inform them of a 10 per cent drop in the value of their portfolios, only for the markets to rally shortly afterwards leading the portfolios to move above the 10 per cent drop limit.

3 Time to break up

Insurers seem to be keen to isolate parts of their business, in particular to split off their general insurance arm.

Earlier this week Aviva revealed it was considering splitting its UK business into two parts, with one part containing the life insurance division, while the other would hold GI, such as home and car cover.

Maurice Tulloch, who was appointed chief executive at the insurer in March, said he wants to "re-energise" the 323-year old British company.

Then this morning (May 31) it was announced LV and Legal & General are going one step further and are offloading their general insurance business to German insurance group Allianz.

Remains to be seen who comes next.

4 Poor pensions

Apparently only a third of individuals are receiving the full new state pension.

A freedom of information request from pension provider Canada Life found that almost two in five pensioners - 365,290 people, or 38 per cent of claimants - receive less than £150 a week, while 282,447 pensioners (29 per cent) are receiving more.