Below is an article that I wrote for Money Marketing, a weekly magazine for financial professionals. The original article appears here.
I wonder what we’ll all talk about when the RDR is finally in place? I foresee seminars and branch meetings filled with awkward silences and tumbleweed drifting across the meeting room floor. Then someone will announce that all advisers will have to be qualified to level 6 by 2017, everyone will take a deep breath, and the cycle will begin again.
Until that time I hope you’ll forgive me for adding my little bit of noise to the ‘debate’ about the current implementation – shall we call it RDR 1?!
It drives me nuts that the regulator seems to have come full circle. For years, under principles-based regulation we have been told to implement robust, repeatable processes in our businesses. Apart from being sound business practice, it also helps us to ensure predictable outcomes for our customers.
But now we read that too many clients are being ‘shoehorned’ into these robust repeatable practices. We are told to ensure that clients can actually be advised off-panel, or off-process to prevent this from happening. What’s the point of having a process which can be ignored some or all of the time? And how the hell are we supposed to document this non-process part of our process?
Ah well, there is at least one ray of light in the independent vs restricted Final Guidance paper from the FSA. In paragraph 2.15 we are told that any justification for including or excluding a particular investment from our advice ‘needs to be centered on the client’.
The client, yes. I remember him. Or her. These are the people that we are all in business to serve, right? I wonder what they think about all this? Actually, I know what they think and they could not give any less of a fig about our professional introspection. As we obsess about processes, qualifications and capital adequacy, they are worried about having too much month left at the end of their money, or about whether or not their aging parents will need care.
Clients don’t care about products. As long as their needs are met and their goals given a fighting chance of being achieved, they’re happy, but generally they do not care about the detail. This is clear from the worrying lack of interest from some clients when I obsess about the TER of a particular solution I am recommending. ‘Don’t worry about price, Pete – will it do the job?’
Clients don’t care about advisers, either. If they could go through life without ever setting foot in our offices they would. Our biggest threat has never been banks or direct sales forces, it is the internet. There are now online systems in the US that offer fully personalised financial plans, plus phone access to a CFPCM adviser for a year, all for £250.
No-one ever wakes up and decides to go see an adviser to sort out their financial lives. It takes some crisis or life event to trigger them, reluctantly, to pick up the phone to make an appointment. They just want their needs met and couldn’t care less about whether we are a financial adviser, a financial planner, a financial life planner, or multi-disciplined karmic money-guru.
So I’m looking forward to the day when I can spend more of my time actually ensuring my clients’ needs are met, rather than tweaking processes to please the regulator. That’s what my clients want, and it turns out, that’s what I want too. Can I please just get on with it?