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FCA puts faith in small firms, but is the feeling mutual?

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by Michelle Abrego on Jan 20, 2014 at 13:06

FCA puts faith in small firms, but is the feeling mutual?

The Financial Conduct Authority (FCA) has hailed small IFA firms for adapting successfully to the retail distribution review (RDR) and is hoping their evolution can help plug the advice gap.

Last week the regulator published its first progress report on the advice market a year on from the introduction of the RDR.

A drop in the number of bank and building society advisers, down by 26% from 4,810 in January 2012 to 3,556 in January 2013, initially stole the headlines, but behind these numbers there was evidence that small IFAs were thriving in the new world.

Not only had the number of financial advisers increased, albeit marginally by 6%, but FCA chief executive Martin Wheatley and Nick Poyntz-Wright, director of long-term savings and investment, both singled out smaller firms for praise.

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19 comments so far. Why not have your say?

Colin Pal

Jan 20, 2014 at 13:47

The FSA's valediction was 'Panic, Chaos, Disorder - Our work here is done'.

I thought that maybe the FCA offered greater promise.....but then again, maybe not.

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Ian Lees

Jan 20, 2014 at 13:52

Having been first to destroy Small Firms . . .the FCA claims to have " hailed Small IFA firms ( most of whom have been required to go " Restricted or Tied " reducing quality and Quality of service ) for adapting successfully to the Retail destruction Review ( IE Going Tied or Restricted as being " adapting " ) and is hoping ( Hoping - no sign of ANY Business Plan there then ? ) - their Evolution can help PLUG THE ADVICE GAP. The result of FCA /FSA institutional and corporate destruction directed by the Government and their FSA /FCA puppets . . . . have NOT YET, discovered that the facility of Advice under FCA and RDR - means lower advice - restricted services - restricted advice for the masses . . . . . and HUGE COSTS for Independent advice - whilst offering full control for the Directors of their chums of large incompetent insurance companies - who are insolvent and disappearing like Snow off a Dyke ( for the English . . . a dyke is a Wall . . not a Greig . . . . ). No sign of any Robust opportunities for giving of good advice - and with numbers reducing there will be no need for such a large FCA . . . . . . . .

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Neil Duthie

Jan 20, 2014 at 14:03

Is it just me that doesn't understand what Ian Lees says?

Mr Wheatley's comments seem realistic and supportive of the smaller IFA's It should come as no surprise that the large firms with expensive structures will find the move from a commission model more difficult to handle than the smaller, more adaptable firms that are usually closer to their clients.

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Knowledgable insider

Jan 20, 2014 at 14:09

Surely the role of management is to consider what needs to be provided to

satisfy market expectations and change direction in line with what is anticipated. This lot seem to think of an idea without anticipating the consequences and when it all goes wrong flatter those that have been put out of business as a result of the incompetence of the FCA. If it wasn't so infuriating it would be amusing!

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Chris Miller

Jan 20, 2014 at 14:29

'We create certain amounts of structure...and the market works out the way to.... best deliver'.

'STRUCTURE'. Please don't make me laugh.

As for ' the market works out a way to deliver'.... I think we can interpret that word 'DELIVER' as 'survive'.

I was going to have a biscuit with my afternoon cuppa, but Wheatley seems to have taken it.

Where next for Wheatley?.....

This week head of the FCA; next week?... how about a comedy spot at his nearest Butlins. He wouldn't need to actually say anything, just stand there; he's a joke in his own right.

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Julian Stevens

Jan 20, 2014 at 15:00

How can any firm "evolve" when it's bogged down in an endlessly deepening and thickening quagmire of endlessly prescriptive rules and regulations?

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Barney Stackhouse

Jan 20, 2014 at 15:24

Neil Duthie - I agree with you - smaller firms are nearer to the client - meaning less layers of cost being pulled out before the revenue stream has all but gone by the time it gets to the person who is a) qualified and b) actually advised the client i.e. the adviser.

The point about tied/restricted is still a grey area though because in order to remain 'whole of market' or 'independent' advisers must have a robust process to show that they are actually considering every product in the market - including the risk associated with the National Lottery and other potentially high risk investment solutions. Consequently their P I cover costs are astronomical.

Some advisers have chosen to restrict themselves from exposure to those type of risks - and by default their clients who in the main do not have the propensity for that level of risk or capacity for that kind of loss when the risk associated is explained properly. Hence the mess with some of the Structured Products and other UCIS we have seen collapse over recent times.

Restricted advisers may not be able to consider the full A - Z of solutions, however, the grey area is in whether they can consider A (one company's products) or A - W (nearly every company's products). How to address this 'grey' area is of course a bit of a conundrum to which I have no easy answers.

What is becoming clear is that our industry seems to be moving away from having the image of 'someone earning lots of money by doing very little' to 'someone earning a reasonable living by spending more time working AND explaining their value to their clients'.

Any thoughts folks?

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Philip Stevenson

Jan 20, 2014 at 15:28

Sorry to say to all the doomsayers. But business' always have to adapt to survive to thrive. Those that don't stagnate then wither and die. The fact that you are still here proves Mr. Wheatley's point

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Walter White

Jan 20, 2014 at 16:33

BBC2 9pm Ian Lees C Nesbitt: Comedy: featuring Scotland's angry middle-aged man.

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M E Too

Jan 20, 2014 at 16:36

It's basic maths - the more snouts in the trough the less there is to go round. Large firms with lots of layers cannot make enough money. With fees falling i can see only one outcome - low cost, efficient structures are the only winners.But let's not be complacent....

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M E Too

Jan 20, 2014 at 16:37

@neilduthie - good point....

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Ian Lees

Jan 20, 2014 at 16:42

@Barney Stackhouse . . .smaller IFA's have always looked after their clients . .. yet the FCA and their past (PIA FSA ) refuse o accept this. The reason is simple . . .it is difficult to obtain new business ! It is hard work in terms of sales and marketing required ! it is expensive in time effort and cash ! so it is better to find clients who require service and want to pay for it by commissions or fees. The FSA/FCA refuse to accept this - despite their huge fines ( accepted and negotiated by financial institutions ) . . . .and FCA lack of understanding of a small business. The desie of the FSA/now FCA to drive small businesses out of business by whatever means necessary - claiming a requirement for Level 4 qualification to sell a life assurance policy ( demonstrating stupidity of MP's and their FCA regulator . . . destroying protection for families and protection for businesses . . .and the cost on the public purse . . . . . for benefits . . .which the Conservative Government - are now refusing to pay . . .initially to immigrants to the elderly and to the vulnerable in society ! These are the activities of a " Conservative Government ? " permitted condoned and implemented by Iain Duncan Smith . . . .and his rebels ! Financial services for the masses . . .the elderly . . .the vulnerable . . . .cowboy Members of Parliament . . . . .

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Ian Lees

Jan 20, 2014 at 16:58

@Wally White . . . .Walter by name Wally by nature . . . . . I have my own opinions which I am willing to share - and debate with you or anyone based on fact rather than fictions or spurious gossip. I do not see myself as " an Angry Man " ( I may not be a Man ? I may be using a non de plume - that is not a feather out of a chickens backside - mr white ? ). I am a BBC 1 person myself. BBC 1 is where debates take precedence . . .leaving the pretentious to formulate their own opinions on BBC 2 or other BBC channels . . . .for the sanctimonious . . . .and those who refuse to accept reality and those who are followers. I find it more acceptable to have good Morals . . . act in a decent and honest manner - rather than be swayed by the immoral marketing and branding and being hoodwinked by those who seek to flog products . . . . . fee based - individuality - or as I call it Totally Independent - free from the marketing junkets bungs and backhanders . For the record Mr Nesbit has a great variety of Comic Roles - from Para Handy to many English characters . . . so Mr or Mrs . . . .Wally White - even your comedic knowledge is, like you . . . . limited and Restricted.

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Ian Lees

Jan 20, 2014 at 17:07

@Neil Duthie . . . it appears you fail to understand WHY so many IFA's have left the industry ? The reason is the FSA/FCA destruction of Small IFA businesses - leaving only the few. Usually large organisations who can repeatedly pay the fines for failure " To Treat Customers Fairly " - to the FCA ( yet most smaller businesses already carry out and treat their customers much more fairly than any huge organisation e.g LloydsTSB PPI misselling after endowments and pensions ) The remaining large companies and their agents restricted and Tied - who are operated through Restricted Advice route or Tied Agencies It appears Neil that you have missed the cost of administration of advice - or its being increased ? It appears Neil that you have missed the severe increases in FSCS Costs FCA Fees have also increased - which you appear to have missed. Is there anything I have missed to alert you Neil to assist you by way of . . . an explanation . . . . alternatively you could ask others . . . . .

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Ian Lees

Jan 20, 2014 at 17:12

@Julian Stevens - these are the activities and strategies of an ever depressing FCA - who lavish more administration - more requirements on small businesses - leaving the lurching insolvent companies to do what they want - without any controls or any proper Management. The FCA is basically a Civil Servant - from whom no control is administered - to cover up the inadequacy of MP's - and the Parliamentary Ombudsman. The FCA refuses to provide figures on how many business they have shut down - or figures of how many "Independent "advisers are left. Let the FCA provide accurate figures - it should be a relatively simple task. Or as Paddy McGuiness would say No Likey - No Lightey ! or as Independent Fiancial Advisers are watered down the drain of life . . . . . . . Let the Toilet see the Flush !

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M E Too

Jan 20, 2014 at 19:05

I think the personal comments need to stop. We should all know why.

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Julian Stevens

Jan 21, 2014 at 08:28

And now we're to be hit with yet another massive increase in FSCS levies which will doubtless lead to yet more firms going to the wall. How can such a state of affairs possibly be sustainable?

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Ian Lees

Jan 21, 2014 at 09:02

Higher Fees higher increases to FSCS Levies - with less businesses - to be reduced further . . .and Martin Wheatley is as quiet as a Church Mouse . . .and nearly as effective.

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Walter White

Jan 21, 2014 at 09:36

@ Ian Lees - are you on the FCA register yet? or are you still trading as an unauthorised advisor ?? like a Che Guevara figure advising outside of the governments control.. viva la revolution!

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