Last year was a seminal year for the UK financial services industry. The implementation of the Retail Distribution Review (“affectionately” known as RDR), not unnaturally led to a huge amount of soul searching in the industry, particularly among advisers.
Quite apart from the challenge of adjusting to a commission-free world, we were all preoccupied with (among others) issues such as the cost of servicing lower-value clients, “clean” share classes and fixed or percentage ongoing fees.
A year on though I would respectfully submit that it is time to move on. A Twitter “conversation” last week with Chris Budd of Ovation Finance reminded me that there are far more important matters affecting people’s finances. The adviser community risks appearing irrelevant or worse still uncaring if it doesn’t give voice to these concerns.
I had this point rammed home in the autumn when we initiated two client communications in the autumn of 2013. The first informed our clients about the change to clean share fund classes. Having spent some time composing the email letter I was almost disappointed to find that NOT ONE client was concerned enough to get in touch! The second was a client satisfaction survey. When asked in the survey to prioritise their top five reasons for using our firm, investment and advice costs came a distant third behind the main reasons for buying our services. I suspect that other advisers would find that their clients had similar priorities.
There is a danger I think that especially when “chatting” on social media sites, advisers appear to be “navel-gazing” and out of touch with the everyday concerns of ordinary folk. We may have different reasons for using sites such as twitter and one may be to chat with our peers. However, it cannot help an industry that has long complained of being ignored/sidelined to then engage in discussions which appear irrelevant to Jo Public!.
So what are the “big issues the industry should focus on this year. Everyone will have their own opinions but here are a couple to start with, one of which is already generating a lot of heat. Some advisers have taken a commendable lead in focusing on the scandal of annuities. All advisers should give voice to this topical issue, in the process widening discussion away from focusing only on the need for independent advice.
Another major issue, that got Chris and I talking last week, is the potential problems caused by the Funding Loan Scheme and it’s possible distorting effect on the housing market. Whatever your views on the merits or otherwise of FLS, it’s impact is certainly important to a far wider audience than just advisers. It is one we should be contributing to: in a big way!
I do acknowledge the sterling efforts of some advisory firms that are already publicising these issues. There are other important topics too, and some will hit us from “left field” this year which none of us can forsee. Providing a timely and coherent response to these issues and their effect on the public will (possibly slowly) begin to remind the government, regulators and the public alike that we are genuinely capable of providing a signifanct contribution to the development of financial services in the UK.