Other Citywire websites
Stay connected:

View the article online at http://citywire.co.uk/new-model-adviser/article/a453643

RDR debate: MPs call for grandfathering and qualifications rethink

by Alex Steger on Nov 30, 2010 at 07:49

RDR debate: MPs call for grandfathering and qualifications rethink

Backbench MPs have called on the Financial Services Authority (FSA) to reconsider its stance on adviser qualifications and allow grandfathering, in a House of Commons debate on the retail distribution review (RDR).

MPs from across all parties criticised the cost benefits of the RDR and the impact qualifications may have on adviser numbers and access to advice.

Around 80 MPs attended the debate and repeatedly questioned financial secretary to the Treasury Mark Hoban over the impact of the RDR and the regulator's accountability.

Mark Garnier (pictured), Conservative MP for Wyre Forest, who with Conservative MP for West Worcestershire Harriett Baldwin proposed the debate, said the RDR’s level four qualifications requirement did not take into account experience and placed too many time and cost demands on advisers.

‘RDR is requiring all financial advisers to attain the QCF level four pass and in the broadest sense that is not unreasonable,’ he said. ‘However, what it does not take into account is there are a great many IFAs who have a wealth of experience but with an average age of 47 little enthusiasm to start taking new exams.

‘It is estimated that these exams will require one hundred hours of study for each of them; this for an individual who needs to earn a living and may be working by himself in a rural community,' he added. ‘I can see no reason at all for not introducing grandfathering rights and indeed when the FSA was set up they introduced grandfathering rights when IFAs came over from the Personal Investment Authority.’

Garnier’s appeal for grandfathering was backed by Conservative MP for South Derbyshire Heather Wheeler and Conservative MP for Aberconwy Guto Bebb.

Baldwin (pictured) argued the new qualification requirements would not stop mis-selling.

‘If I thought passing an exam would prevent mis-selling and we would never have any more mis-selling in the future I would be more supportive of this idea, but ..an ability to pass an exam…doesn’t seem to me to preclude mis-selling in the future,' she said.

Sign in / register to view full article on one page

129 comments so far. Why not have your say?

Nick

Nov 30, 2010 at 08:09

It wasn't so much a debate every MP was saying the same - the FSA is wrong!

Doubt Hector was listening though, he will plough on regardless thinking

" how dare those MPs question the FSA actions, who do they think they are!"

report this

Ben

Nov 30, 2010 at 08:16

I've not seen a more one sided debate. Would have been nice to see someone play the devil's advocate.

Also, the MPs displayed a complete lack of understanding of how fees (aka customer agreed remuneration) will actually work.

report this

Sean Narey

Nov 30, 2010 at 08:38

So a few backbench MP's think that because advisers can't be bothered to get their technical knowledge up to speed and prove it that we should drop standards. Do they not realise that the mis-selling referred to was carried out by those advisers that they want to grandfather across!!

I don't care how experienced an adviser is; experience could mean getting it wrong for 20 or 30 years and some MP's want to protect these people. Exams might not provide a guarantee of ethics but they are vital step in creating a profession and not a product selling industry.

Besides, if advisers have spent 30 years advising based on FP1, 2 and 3 then they probably don't have any idea how little they know!

report this

Wyn Matthews

Nov 30, 2010 at 08:38

This debate rolls on...

Just why should 'grandfathering' be allowed, if time served IFAs are as experienced as they make out then it shouldn't take them 'one hundred hours of study for each of them' to get suitably qualified.

If they do need to undertake so much study time for exam preparation - and are reluctant to do so - then their ability to give appropriate advice should quite rightly come into question.

report this

Alan Lakey

Nov 30, 2010 at 08:39

Forgetting for one moment the MPs lack of full appreciation of the nuances of the industry and also the poor performance of McHoban it was clear that the unanimous view was that the FSA should think again.

They are not beyond the reach of parliament as Andrew Tyrie will indicate shortly.

report this

Banged to Rights

Nov 30, 2010 at 08:43

What no sex ? No drugs ? No political point scoring ?

80 MPs turn up on a grave yard slot debate on the coldest day on record for November. Just cross party agreement that the FSA has yet another call wrong with RDR.

The FSA

• Cost £3.2 billion or so since inception but has achieved worse than nothing.

• Overseen the worst financial crisis since possibly the fall of Rome.

• Conclusively conspired with the ABI to allow endowment projections to be relied upon by consumers and advisers when actuaries knew they were wildly over optimistic – consumers lost

• Equitable Life tea and biscuits meetings by unqualified people just believing what they were told – consumers lost

• Split Capital Trusts – FSA backed down from providers ready to take them on as they were out of their depth again – consumers lost

• Brought in Polarisation tied, multi tied and Independent in an attempt to rig the retail market towards the banks incurring huge costs imposed upon the consumer and industry - to no benefit of the consumer. Just confusion and yet more cost.

• Precipice Bonds just asleep at the wheel – who lost out the consumer

• Northern Rock – We were saying in 2004 and 2005 that the mortgage market was not real and that when multiples went from 3.5 / 4 to 4.5 to 5 or even more along with term of loans going out from 25 years to 35 years it was not sustainable and it was causing asset inflation. But who was encouraging the Banks? Why the FSA see 2006 Milan speech "Distressed debt everyone's a winner". Dr. Thomas F. Huertas Director, Wholesale Firms Division and Banking Sector Leader

“In sum, I believe that the distressed debt market can in fact be both good riddance and great opportunity. Good riddance for the seller: it can put the bad debt behind itself and specialise in the origination and servicing of performing loans. Great opportunity for the buyer: it can earn a satisfactory, risk-adjusted return on its specialist valuation and work-out skills. The FSA welcomes the further growth of the distressed debt market as an orderly, efficient and fair market.”

Now we all know where that toxic debt time bomb has pitched up - you got it the Tax payer!

• Of course no one took any notice of us. Even when it went pop in July 2007 it took until September for anyone to notice! Who is losing out – The consumer (taxpayer) big time and for years to come.

• This quango stuffed with unqualified and inexperienced staff intent on designing hundreds of box ticking forms and returns has got every major call wrong you just could not make it up.

• It has RDR wrong as well to cut the mass of consumers off from proper independent financial advise just when the country needs to change its culture to one of saving and investing from one of instant credit creation is a tough call in the best of times. What is needed is to change the rules on its head and to regulate the products and make saving and investing the right thing to do and truly create a structure that is sound and sustainable. This RDR is another attempt to rig the retail market that has costs that have exploded out of control to a now estimated £1.7 billion - just mind blowing to us in the real world. It does reflect on an FSA that even though it sets its own limitless budget still over spent and had to borrow £200 million from 2 of the banks it is supposed to regulate to keep itself afloat. So much for prudential management and financial stability I am just stunned by the corruption that has pervaded every aspect of government over the past few years the UK used to be fairly straight (arms deals and the odd secret service action aside) but now it has sunk to European levels perhaps because the EU is seen as the benchmark nowadays?

report this

Simon Bullivent

Nov 30, 2010 at 08:51

The real issues in my view are the increased capital adequacy requirements and timing. The whole debate seemed to be swamped with commission and grandfathering, neither of which are defendable causes in my opinion but were obviously most heavily lobbied. The most worrying part was Hoban reading verbatim a statement which surely could only have been prepared by the FSA - just like a scene from Yes Minister with Hacker dutifully repeating a script from Sir Humphrey Appleby. I believe the phrase is that the "Minister has gone native"!

report this

Sean Kelly

Nov 30, 2010 at 08:55

Not having a life and not wanting to watch Barca v Real I watched the debate. Whilst the MP's who contributed appeared to support a review/postponement the summing up from Mr Hoban (who appeared to ignored all contributions and seemed to be singing from the FSA songsheet) did not leave me with much hope.

Many of the comments referred to clarity and fairness etc. No one seemed to realise that commission will remain for all but independent advisers and that full disclosure has been around for years.

One or two managed to pick up on the fact that it will not be a level playing field but the vast majority did not.

Unfortunately there seems to be this mistaken impression that all IFA's earn £100k+ and therefore must be doing something that is underhand.

report this

Andrew Visser

Nov 30, 2010 at 09:03

Hark do I hear common sense prevail. At last is the gravy train being questioned. Grandfathering why not.Is Mr Hoban the right man for the Job.

report this

Alan Lakey

Nov 30, 2010 at 09:05

Banged To Rights - just about sums Hoban up

report this

Bobby 21

Nov 30, 2010 at 09:07

The FSA is either totally out of touch or they are taking full advice from their ex colleagues The Bankers ???

Is RDR really going to put the consumer in a better position post 2013 ?? How is it going to help the average person on the street to save ?? Is the average Joe really going to be willing to pay £300 out of their pocket to set up a £100 per month personal pension or regular investment ISA???.

I think as far as qualifications go, yes the level of qualifications needs to be increased if we ever want to be treated the same as other professionals. New entrants need to be Level 4 without question and existing IFA's experience should be recognised. This happened in other professions such as Law and Stockbroking so why shouldnt we be treated the same ??? The deadline should also be extended, whats the big rush all about ?? AAAhh the banks again they want to shrink the IFA population,

Shame we couldnt get some Wikileaks on talks between the FSA and their ex-employers.

report this

PD Off

Nov 30, 2010 at 09:12

Having witnessed the most one sided debate ever, it was reassuring that Parliament was willing to stand up to this tyrannical quango.If the FSA had any decency, there would have been certain resignations this morning after being so publicly humiliated. Some chance.

Mark Hoban was a total embarrassment. He seemed terrified that someone would bring up the £150k question about his impartiality.

report this

Elick

Nov 30, 2010 at 09:21

I wrote to my MP, James Gray, asking several questions about the RDR including how the FSA could change the way advice is delivered (costing 1.7 billion!) without involving parliament; Altering remuneration to the detriment of many clients but favouring the bank assures; The lack of a longstop; Questioning the stance on the fund rebate question.

I received a reply ignoring all of my direct questions and stating things like; I quote: ‘Following extensive consultation, the FSA decided that IFAs should be compelled to charge on a fee-only, rather than commission, basis and that there should not be a 15 year longstop on legal claims against IFAs, meaning that advice of IFAs could be open to legal challenge in cases that are more than 15 years old’ He must have ‘cut and pasted’ the content of his letter and is really not interested! He obviously didn’t think it important enough to attend the debate, however it was interesting to see his neighbouring MP did attend and she spoke well.

If you watched the final speech from Mark Hoban you would start to question our democracy. Everyone in the house questioned the FSAs RDR and Mr Hoban totally ignored our elected members concerns.

report this

Mr Ed

Nov 30, 2010 at 09:23

Alan, please don't be disingenuous - the MPs represent their constituencies. When those constituencies lobby, they are duty bound to consider and represent those positions in parliament.

You put the words in their mouths; is it 'victory' to hear them echoed back?

The "unanimous view" is a few backbench MPs, representing a select number of interests (assumedly IFAs) within their communities?

Hardly. It's not only the FSA who should think again, I would suggest.

All that was apparent was the genuine lack of understanding of the political community, which has helped create this awful regulatory environment in which we operate - where we'll run from one interest to the next, depending on who shouts loudest.

I was hoping we might have a more genuine and honest discussion of the RDR; with some constructive challenge of the FSA's proposals (because, let's face it, they're not all right - are they?)- what we got was the old refusenik position, just within the slightly more cultured environs of the Houses of Parliament.

An opportunity wasted.

report this

Scared stiff of reprisals 1

Nov 30, 2010 at 09:26

Sorry I missed the debate. I was watching Barcelona beat Real Madrid, far more entertaining. I switched (free switch as well!!) on to the closing remarks. Doesnt sound like i missed much, yet the Barca game was excellent.

report this

Ned Naylor

Nov 30, 2010 at 09:28

Told you so, a complete and utter waste of time. The FSA is a law unto itself and until it is disbanded and we have a legal regulatory framework with a right of appeal and independent tribunals, we will see the RDR come to pass and we will see a massive exodus from the sector of older dinosaurs like me and all those other poor saps who thought that running your own business, build up its capital value and sell it and retirer in comfort have all been conned by the regulator adn in future will find the sale value of their businesses plummet at at time when they may want to take a step back and relax.

I have made my decision, I will take the exams required, I will pass them come what may, RO1 on 3rd December and I will take one every six months or shorter if I pass each one first time.

God knows how anyone will think RO1 is going to make me a better adviser, but hey, it gives 20 points.

Just like my driving test in 1970 , I didn't give up when I failed it the first time, made new mistakes the second time and lo and behold passed third time with top marks.

Taking exams is not necessarily the real issue, the short time scale to allow us dinosaurs to get them is possibly unjustified and for those like me who have sailed along in the Barque of commission comfort, will have to change as change is being forced upon us.

Just like the two frogs hopping along a deep rut in the road, one got fed up and said "I'm out of here, this is boring, I'm off for some adventure" and off he went.

A Few minutes later, his mate caught him up and when he did the first one said, "I thought you were happy in your rut?"

The second one replied, "I was, but a car came along and I HAD to get out of it"

This is where we are now, stuck in a rut and we will just have to get out of it. I pity however the poor saps coming into the industry who seem to enjoy the academic studying more than the client / adviser interaction, they will lose out and probably never really enjoy this job, because all the time they and the clients will be aware of being on the clock and how much needs to be charged to make a profit.

They would never be able to justify a call on an elderly client to see how they are getting on and making sure they know how their investments are doing, or simply making a phone call to a client recovering from a serious illness as they would not be able to justify the time spent on non productive activities.

The poor struggling middle classes can go boil their heads now, the public don't understand what is going to come about and there is no plan for the FSA to publicise and educate the public to get them used to paying fees.

That is the most distressing element, the FSA has actually ignored the needs of the consumer to be able to come to terms with the approaching 9/11 style devastation being visited on our sector.

IF there is a fall in advised retail investment by the same percentages as predicted for fall in adviser levels, (20-30%) what is the effect going to be on the economy. Are the banks going to be able to take up the slack and SELL retail investments without advice to keep the markets moving.

Any client who buys an investment without advice needs their head seeing to. Caveat Emptor comes to mind.

The providers have failed us already in kow towing to the demands of the FSA to come up with systems to price their products without the element of commission and we are stuffed either way. Commission was a useful tool by which adviser firms could fund their businesses without having to borrow money from our wonderful understanding banks, who right now must be laughing up their sleeves at us.

As with Mortgage Brokers, the traditional (dinosaur) IFA will inevitably die a death and we will see more and more people being herded to the banking cliff by the regulatory body, just like lemmings.

For once, I would like to hear something really positive on how we can convert our businesses to total fee based activities without sacrificing the quality of our services and without losing the "human" touch when deaing with our clients.

I have an idea that FIXED FEE services may be the way, but having recentily embarked on one exercise which I estimated would take me a couple of hours, after logging all tasks on to the time management section of our software, it took eight hours in total.

Where does the time go ?

Soon be Xmas.!

report this

peter dawes

Nov 30, 2010 at 09:28

The point I would like to rise is around Grandfathering.

my partner works as a health Professional and has recently had to up grade her qualifications, she has been in role for some 20 years plus, sound familiar.

The difference being that her profession were allowed Grandfather, as the health sector feared the impact on patient care if not allowed due to the amount of experience that could be lost!!!!!

report this

Andrew Dickson

Nov 30, 2010 at 09:29

Last nights debate was a success especially given the number of MPs taking part and the unanimous cross - party support for the IFA cause.

Mark Hoban read a statement that really did sound as though it had been prepared by the FSA for him. There was no specific response to the points raised.

Thanks go to every one involved for their efforts.

Next step - letters to the Treasury Select Committee (For Mark Hoban) setting out individual comment on the many different issues raised in the debate.

report this

John Burchett

Nov 30, 2010 at 09:29

Hoban and the FSA have their own agenda so nothing will change. The Banks will benefit and misselling will become the norm.

report this

John Smyth

Nov 30, 2010 at 09:30

For any real notice to be taken of the IFA community maybe we will have to take to the streets like students, the Irish, the French and the Greeks, that is without the violence.

This government like the one before it are being hoodwinked by the vested interests of the banking community.

They are getting away with bonuses as usual £7bn and there is still not much talk from the politicians about splitting them up. I even heard a politician on the radio this morning referring to us becoming even more of a service industry nation. Is he mad ? Has he not learned about how the Germans have prospered ? We can't just sit around gambling and circulating the countries money around amongst ourselves and skimming of a little here and there. Eventually the money will run out. We need more manufacturing, technology, invention and creativity.

A thought which came to me recently was that if the banks are still short of capital why are they continuing to flog bonds to any customer with a few thousand pounds in their account and passing the money across to assurance companies then telling us they are short of money to lend ?

report this

Chris F

Nov 30, 2010 at 09:48

to: Sean Narey - you said:

"Do they not realise that the mis-selling referred to was carried out by those advisers that they want to grandfather across!!"

Could you back this up with the statistics that you undoubtedly have in order to make such a bold statement?

There are 2 keys to being a good adviser:

1 - Being moral.

You've either got this or you haven't. Lots of bits of paper mean nothing and I have seen mi- selling from the over qualified as much as the under qualified. Greed is greed.

2 - Knowing when you don't know.

In my experience those who have their heads so far up their own fundament that they can only see their economics degree tend to think they know everything. These are truly dangerous as they rush in where angels fear to tread.

The best advisers I have worked with are those that care about the clients enough to walk away from a case that is beyond their ability.

I have to say, Sean (and Wyn), it is difficult not to get all ad hominem with your type, but I resisted.

report this

Jonathan Kirby

Nov 30, 2010 at 09:51

Wyn - 100 hours of study? The Architas 'designed for purpose' Diploma is 390 hours.

That's more than 10 weeks at a 'normal' working week.

Nobody earning a living can afford that kind of time - my days are spent servicing clients - you cannot do both.

report this

Richard

Nov 30, 2010 at 09:54

Judging by the fact that practically everyone is saying that RDR needs a re think re grandfathering - it seems slightly odd that one person - Hoban- can see it all so much clearer than everyone else! What does he see that the rest of us don't ? Nothing is the answer , but like a lot of people who "take a position" - they often aren't big enough to admit they may have made a mistake. Is a whole industry to suffer for one man's intransigence?

On this basis older lawyers, accountants,doctors, nurses, civil servants - who may not be able to pass a set of modern exams - are to have their lifetime's experience cast aside because they can't pass an arbitrary test of knowledge that has little relevance to the day to day job they do - which more often than not relies on experience of past events to guide what they do -

I trust Hoban is enjoying the hopefully short period of limelight, till someone with a wiser head ( a grandfather even) comes along and knocks some sense into him

report this

Ive had enough !!!

Nov 30, 2010 at 09:54

Oh well, back to studying

report this

Chris F

Nov 30, 2010 at 09:56

Wyn thinks we should all know enough to pass the exams. I remember in my J01 (which I passed first time by the way) there were 8 marks on the taxation of forestry investments.

Call me old fashioned, but I know there are some tax benefits and beyond that I'd just look it up if I had a client suitable.

Wyn thinks we should all know everything about everything - clearly impossible which is why GPs refer patients to specialists.

Wyn is different, however.

report this

Ive had enough !!!

Nov 30, 2010 at 10:02

Chris F ,

NICE ONE !

The best stitch up ive ever come accros was by one of those chartered financial planners ,loads of graphs etc .... but keydata Arc and even an Iceland bank.

But the Life plan looked great .

report this

brian hammond

Nov 30, 2010 at 10:07

Mark Hoban is also the individual who stated that the FSA was the organisation best placed to advise on bankers' remuneration, bonuses, etc. - a framework that the FSA mirrored !!!

The best thing he can do is resign and go and live in Hoban, the one in Australia, that is !!

report this

Bob Donaldson

Nov 30, 2010 at 10:24

A good debate although a little one sided. I have two things to say to those that believe grandfathering etc is not on. Why did you not brief your own MPs on the other side. It appeared to me from some of the input by financial advisors that many who are qualified still do not believe it is purely exams that count.

One of the key points that did come through was what is the RDR going to achieve. It appears that the general consensus is nothing.

With regards to what will change following the debt - I think nothing unless the Treasury Select Committee get their teeth into it.

As for Hoban - I believe he is to allied to the FSA to make a sensible decision by listening to the other side of the argument.

Nothing wrong with change but change for change sake is not necessarily a good thing and much of what the FSA wants can be achieved far more easily.

As for me I will make the changes necessary as I owe it to my clients

report this

David Barnett

Nov 30, 2010 at 10:34

I attended the Debate last night at the invitation of my MP Matthew Offord,

who I have met and spoken to on a number of occasions about the RDR. He as well as all the other MPs from both sides of the House, defended the

position of IFAs most robustly. What was staggering but sadly unsurprising

was Mark Hoban's response. He neither acknowledged what all other MPs had said and would not give way to any MP during his closing remarks. The man is a disgrace and it does beg the question as to who he really supports in such matters. It certainly is not the IFA, or perhaps more importantly not the general public, who will suffer if the RDR goes through in its present form. That just leaves the Banks, well their's no surprise. Lets hope the momentum carries through to the TSC which hopefully can really rock the FSA boat.

report this

Jonathan Kirby

Nov 30, 2010 at 10:40

Sean Narey - having read your comments I assumed you not to be an IFA. However, I see from the FSA register you are a recent recruit to the industry.

Given time you will change your tune.

report this

Mole

Nov 30, 2010 at 10:41

Hoban's "statement" was a joke

Written by some other bloke

One who works for the FSA

who's never been an IFA.

The banks as usual hold sway

Over the Craven FSA

We thought the Tories may improve

But no - it's still the same old groove

So don't expect that much to change

Grandfathering is not in range

Get out the books, turn on the light

Prepare to study day and night

Clients be they rich or poor

Will beat a path right to your door

When commission cannot be

And they have to pay a fee

And if, like me, you're getting on

Two more years and we'll be gone

Even though Chartered, as I am

"Frankly my dear - I don't give a Damn!"

report this

Rosemary Heaversedge

Nov 30, 2010 at 10:44

Whilst everyone is rushing around in ever decreasing circles about qualifications, the realisation that has dawned on me is that there is absolutely NOWHERE that Joe Soap can check on an adviser's qualifications.

The FSA may confirm that an individual is registered with them but gives absolutely no details.

I have been trying to check on the qualifications of an IFA with absolutely no success.

Those of us who have bothered to qualify, have had no support from the FSA or the CII in terms of educating the general public.

I have certainly had instances recounted to me of the FSA not reacting to v high payments so long as the paperwork was correct and the client had been informed. Well, information can be transparent or not, one suspects and some clients do not even bother to ask.

If the FSA and CII had informed the public better over the years, there could well have been a natural progression to qualifications, which do take time and money but remain unrecognised.

report this

Anitaki

Nov 30, 2010 at 10:45

Even the Government calls upon them "to reconsider". "OK, we've 'reconsidered' and we're not going to change a thing"

report this

Man in Black

Nov 30, 2010 at 10:47

Is it that Garnier and Ms Baldwin have only recently become MPs and so are not yet complete cretins?

I mean, they seem to understand what passes FSA (and indeed NMA) by i.e. that greater levels of qualifications are no bad thing in the long term, but the way RDR imposes specific qualifications on all is something that can inflict serious damage on the independent sector.

Or is it that only the FSA can make MPs look like they've got some common sense?

report this

Tony Clarkin

Nov 30, 2010 at 10:57

Mark Garnier's summing up of the RDR was refreshingly succinct;

“a combination of unfounded assertions, limited and contradictory research and, as regards some of its solutions, little more than a hunch that the outcome will somehow be better than the present system."

No doubt the FSA will soldier on regardless.

report this

Peter G

Nov 30, 2010 at 10:58

One thought crosed my mind,is it legal under the FSMA 2000 to change the requirements in respect of qualifications.Then i woke up and realised it doesn't matter the FSA are way above the law!!!

report this

Steve

Nov 30, 2010 at 10:59

An interesting and one sided debate on this blog I would conclude.

I agree that it should be the wholesaler who needs to clean their act up - I get fed up looking at products being pushed at me by salesforces telling me its the best thing since sliced bread and it helps are clients because of all these features, all of which is paid for by the client, and when the brown sticky stuff hits the fan its the retailer who takes the can for it all.

The IFA community does appear a little blinkered on political debate and the FSA, we are but a small drop in the ocean in the grand plan of life - lets focus on running good businesses and keep telling the stories on how bad the banks and big sales teams really are - if they were that good we would all be working for them or our small practices would continue with small client bases.

report this

Bucky Lasted

Nov 30, 2010 at 10:59

The nit picking ,box ticking, tyre kicking ,control freaking ,FSA want to turn us into fellow bureaucrats ,making us into the bargain an unpaid collector of an extra source of VAT from our clients 'fees'

report this

Ned Naylor

Nov 30, 2010 at 11:11

Rosemary - you can generally check an advises qualifications on IFA website at www.unbiased.co.uk

report this

Stratfield

Nov 30, 2010 at 11:19

Very interesting that the FSA want all IFAs to attain QFC level 4 by end of 2012. An arbitrary point in time no doubt picked after careful FSA "consultation" (you at the back, stop laughing).

However I found this little gem.....

"The Qualifications and Credit Framework (QCF) is a new framework. It contains new vocational (or work-related) qualifications, available in England, Wales and Northern Ireland.

These qualifications are made up of units that are worth credits. You can study units at your own pace and build these up to full qualifications of different sizes over time."

At your own pace... and.... over time eh? Hmmm... and where did I find this little nugget? Why, on the direct.gov website !! Some mishtake surely ?

(Insert smiley of rolling on the floor laughing hysterically).

report this

Catherine Briers

Nov 30, 2010 at 11:24

Baldwin is right to say that qualifications alone don't stop mis-selling, but a tested level of knowledge combined with an absence of commission bias will help significantly. I've monitored the work of well-qualified advisers who sold high-commission earning Bonds when a lower earning product was more suitable. I've also seen fee-based advisers give poor advice due to lkack of knowledge.

The whole argument that advisers cannot find the time to study is claptrap. Like anything in life, if you value the outcome, you find the time. In one year, I managed to complete my Chartered and Certified qualifications, set up my firm and care for two children under 5 while my husband was in Iraq for 7 months of that year. Perhaps I just prioritised, valued my professionalism, and didn't spend a lot of time on the golf course? It's not a lack of time that advisers have, it's a lack of motivation and a failure to see the benefits that qualifications will give to their clients.

report this

Catherine Briers

Nov 30, 2010 at 11:25

Sorry - 'lack' of knowledge in the note above!

report this

Jonathan Kirby

Nov 30, 2010 at 11:29

Catherine - I admire your diligence. Would you do the same if you were age 60 and had getting on for a thousand clients to look after - on your own?

report this

Rosemary Heaversedge

Nov 30, 2010 at 11:41

Dear Mr Naylor

Thanks for the thought.

I do assure you that I tried that immediately, with the post code, and he just does not show up!!!

So where now???

Any suggestions welcomed!

report this

Catherine Briers

Nov 30, 2010 at 11:41

Jonathan - You've got me there - I would never try to look after 1000 clients - just couldn't offer them the service I want to provide and charge for. Something would have gone drastically wrong in my business plan if I found myself in that position LOL A maximum of 80 clients at one time is my strategy. Customers with specific projects are additional to this number but don't become clients who expect (and pay for) ongoing services so they don't need 'looking after'.

report this

Christopher Petrie

Nov 30, 2010 at 11:43

Well, at least we can all agree that the whole RDR thing has been debated in parliament. What seems now clear is that the FSA is not going to change its mind.

Like it or not, level 4 qualifications and CAR WILL be starting in 2 years.

All IFAs must now decide whether they want to be in or out. If in - make sure you get qualified and work on the business model during the next two years. If out - get advertising your business and good luck in whatever you do next.

report this

Mr Ed

Nov 30, 2010 at 11:46

That's a purely personal line of resistance to the RDR, John. I suspect few will admit to such - it's always more ingratiating to couch it in terms of 'client care', etc.

Certainly, it's likely to be a heavy burden if you're attempting a standing start to the qualifications when towards the end of your working life.

But, more generally, it does beg the question of what you've been doing for the last 40 years. Even allowing for the chop and change of requirements, some greater headway could have been made by many of the qualification refuseniks during the course of their careers.

They're caught in a trap partly of their own making, and I do struggle to find much in the way of sympathy for them.

For me, as I've said before, I expect the real struggle to come as people make efforts to change their business models. Qualifications is a side issue, and I'm surprised people are still hung up on it - either do them or not, but the grumbling is tiresome; if you have critical challenges to make, then aim them at the relevant authorities.

And a critical challenge is not: I'm 60 and don't want to do the exams to only work five more years.

report this

Alan Lakey

Nov 30, 2010 at 11:53

@Catherine B

" I've monitored the work of well-qualified advisers who sold high-commission earning Bonds when a lower earning product was more suitable"

Catherine, the problem is not commission or product it is morality.

I have always believed that all SP investments should carry a max 3% commission. This would avoid accusations of product or provider bias and would also allow the fee-based enthusiast to offset or re-invest.

It's like banning all knives, including eating utensils just because knife crime is increasing.

The unethical will always find a means of increasing their income incorrectly.

report this

Man in Black

Nov 30, 2010 at 11:58

@Christopher Petrie

From a practical point of view you're right :-(

IFAs now need to give serious thought to the respective exit v survival strategies.

@Alan Lakey

Nice analogy. Moreover, your comments on MCA illustrate the point that a lot of abuse could be dealt with by more proportionate methods.

report this

michael bates

Nov 30, 2010 at 12:06

BEACHED WHALE HOBAN HARPOONED BY ALL PARTY MPS

Mark Hoban's limited knowledge of the financial services industry and profession made him look ridiculous in the RDR debate yesterday.

It's about time an IFA became an MP. At least we have a good advocate in Mark Garnier and can thank him and Harriet Baldwin, Geoffrey Clinton-Brown, Geoff Offord and the 37 other MPs who stood up for us. Hoban's persuasion by The FSA does him no credit. Such a powerful position should not be occupied by someone with such a narrow view-point. He is too limited and ignorant of the prospective outcomes of the RDR. He should go.

report this

Sean Narey

Nov 30, 2010 at 12:13

Alan Lakey, Catherine B kindly answered Jonathan Kirby for me and I will now return in kind.

3% commission, 1% commission or 10% commission is irrelevant. The fact is that a commission model requires the IFA to transact in one way or another and so transact they will. This would lead unethical IFA's to invest cash rather than pay off debt becuase paying off debt won't generate commission. I do agree with your perspective on ethical behaviour though.

Ban commission and we will have to agree a fee based on the value that we provide to a client whatever the outcome. We should get paid for adding value; not arranging products!

And Jonathan Kirby; you need to learn how to use the FSA register and not just focus on my current position. To save you the trouble, i have been in this industry since April 1997 - and my opinions won't change. Good luck trying to "look after " 1000 clients. I am sure that your wealthy clients are delighted at the cross-subsidy they pay you for looking after the 900 that won't make you a penny.

report this

michael bates

Nov 30, 2010 at 12:19

I've just had it put to me that young advisers will always favour the quick fix of exams rather than sweat out the qualification of experience which the consumer prefers. Looks like the RDR is creating a generation gap as well!

report this

Jonathan Kirby

Nov 30, 2010 at 12:24

@Sean, the history part of the register only takes you back a few years. 13 years is better than 3 but I can remember the folly and arrogance of youth.

I sometimes cringe at my own self self-opinionated views when I was in my late 20s early 30s.

Cross subsidy works in every form of life. Otherwise everyone would pay the same amount of tax, the health service would charge for treatment received, etc etc. And we don't overcharge the wealthier ones but always try to charge according to work done.

report this

Sean Kelly

Nov 30, 2010 at 12:38

Ned made a good point - I passed my driving test back in the 80's. Law's have changed since then but I haven't been required to re-take my test or carry out CPD. And yet the consequences of my actions in a car could be a lot worse than my actions as a financial adviser.

report this

Sean Narey

Nov 30, 2010 at 12:43

@Jonathan

and i can remember the adviser who told me not to question his 20 years of experience whilst insisting that you received IHT taper relief on a PET of £200k; that With Profits Bonds were safe; that Zero's had never ever failed ad nauseum. The truth is, far too many have spent their life selling products and confuse this with giving advice. Financial Products are a by-product of good financial planning and not the end game.

Entry level qualifications are just not good enough and the public have a right to expect minimum standards from advisers; those minimum standards are simply not in place at the moment and higher level qualifications are an essential part of improving the professionalism of the IFA sector.

if you believe cross-subsidy is in any way necessary then a) you need to review your business model and b) you might want to review the TCF guidance from the FSA.

report this

Sean Kelly

Nov 30, 2010 at 12:45

Sean Narey if a client doesnt invest funds and decides to pay down debt what happens if he/she loses their income? They still lose their home as they dont have any funds etc to service their debts.

report this

T Carlton

Nov 30, 2010 at 12:52

@ michael.

The 'quick fix' of exams is as a back up to the experience surely. Exams provide the technical knowledge in a manageable and logical format that purely working for a company and picking up little bits of the jigsaw does not.

Alongside that, it is still necessary to understand the customer side of the job, as advising is just as much about a client/adviser relationship as it is about knowing what you're talking about.

As a young adviser, just entering the industry, I am working hard to take the 'old' exams before RDR comes into play and the whole lot is a waste of time. As has earlier been mentioned, it is a lot of hours study, on top of a full-time job, keeping house and looking after young children. But this is meant to be a profession and as a moral individual, who would like to provide the best for my clients that I can do, any improvement to the industry should be applauded.

CPD should be an ongoing requirement for IFAs, the law changes all the time. As it should be for bank advisers. How anyone can dispute that knowledge and experience are good qualities in the job I don't understand.

report this

Sean Narey

Nov 30, 2010 at 12:54

Michael Bates, Jonathan Kirby...anyone; please tell me what experience "proves".

You can spend a lifetime doing something but it doesn't necessarily make you any good at it!

At least exams "prove" a certain level of technical knowledge exists. The FSA realise that this is only one part of the solution but it is an essential part of the solution.

report this

Sean Narey

Nov 30, 2010 at 12:59

Sean Kelly; if they have paid down their debt; how do they lose their home?

Besides, you miss my point. I am pointing out the clear conflict of interest that a commission based adviser will have in any given circumstance i.e. one route will suit the adviser best and that is the route that they will take (consider Endowments versus repayment....)

If relevant though, some form of Income Protection policy might have been in order...

report this

Jonathan Kirby

Nov 30, 2010 at 13:08

@Sean -

You have said it - ENTRY LEVEL QUALIFICATIONS.

No quarrel with that.

I entered sometime in the early 70's albeit only on the mortgage side.

I don't see why there should be such infighting amongst IFAs.

There is no one right business model and it is the FSA we should be fighting, not one another.

PS - I have never used spilt caps, don't use bonds for 99% of clients (although there can be the odd reason) and unfortunately don't have a single client who has made a PET - like most small IFAs who service average clients of mainly modest means.

report this

Rory Cowan

Nov 30, 2010 at 13:08

Hi All,

I just read the Ethics gap filling exercise on the CII website. It might be an idea for the FSA collectively to read it - and then do it. The RDR debate is a poison pincer question in that you have to get the answer wrong for at least some of the people wanting an answer - trouble is that you have to give an answer.

In this instance the FSA has plouged on regardless of any facts or management information placed before it, and had listened intently to its own ego. (as in better keep going or we'll lose face) Sure there are many opinions but there are precedents as well. There are solicitors practising in this country who have never taken a degree - new ones now have to have one to get in, but the experienced were grandfathered over. (I was also rather disappointed to hear MPs seeming to reject grandfathering on the basis of not knowing how many years experience were needed - if you have 40 years experience you are probably in the frame to be grandfathered - if you have 6 months experience you are clearly not. Somewhere between the two the sensible line lies - are we really so incompetent that we can't address a very simple dilemma of that nature?) Fortunately for solicitors there wasn't an FSA standing in the way hell bent upon removing solicitors from the plot.

There are those IFAs who may be qualified (but will still need to gap fill)and relishing the idea that possibly 25% of the IFAs are to be tossed out upon the scrapheap, but they are in a minority I suggest. There is no exam to test ethics - we can regurgitate what it should be - but there is no test for integrity and frankly that is where the FSA came in - it is grappling with a perceived lack or integrity but doesn't seem to be able to recognise its presence or absence.

The FSA has a wealth of management information on how firms behave, who has done what and who has got what wrong and for that matter who has got what right and we all know where the majority of failures occur - yet the FSA still wants to pillory the IFA whilst the elephant in the room just sits in the corner sucking up public money and handing out fat bonuses.

It's a variation on the Naval board of enquiry - something serious goes wrong and a ship gets bent, then follows the search for the guilty, the punishment of the innocent closely followed by the praise for those who weren't involved.

The metaphor holds true.

Now will Sants get what he so desperatley wants to boost him on that route to the Lords?

The real casualty is likely to be the reason IFAs are there - the client - the client who is perhaps not the wealthiest, but who needs advice so as not to waste what he has hard earned. He will now be forced to take tied advice whether that be from a website or a large incometent high street institution - because he can't access independent advice. He'll get a product but it won't necessarily be any good unless he is very lucky.

It's rather the same reason we didn't all rush ut to buy Trabants when the 'wall came down'.

report this

Ive had enough !!!

Nov 30, 2010 at 13:11

Sean Narey .... boring.

we already have the Bamfords,try and be a bit different

report this

Sean Kelly

Nov 30, 2010 at 13:11

Sean Narey, the real issue here is that commission will not disappear but it will as an option for independent financial advisers. The result is that people will forego independent advice for tied/bank advice which they see as being free.

Already Which? (who should know better) are advertising 'free' mortgage advice to members despite the fact that they will receive procurement fees (commission in other words).

Why should the clients of independent advisers be denied the option of paying for advice via commission?

The evidence of commission bias is not proven and the FSA admitted as much but suggested that as some people think their is commission bias this justified their stance.

PS Most mis-sold endowments were sold by tied agents of life office working for banks or estate agents not independent advisers.

report this

Scared stiff of reprisals 1

Nov 30, 2010 at 13:26

Having been in the industry since 1976 and a practicing IFA since 1990 I feel I could argue for grandfathering. However the fact is the current entry level is far too low. I took AFPC some years ago and believed then that AFPC should be the entry level. I am slightly annoyed that, even with AFPC, I will still need to sit an extra exam or gap fill, whatever that may be?

There is no way that the current entry exams should be considered suitable and our problems are a result of the industry having ducked the issue for too long.

Nobody likes the idea of extra exams but I fear it is a necessity.

report this

Anitaki

Nov 30, 2010 at 13:38

I am now of the opinion that a certain level of qualification should be required before anyone can stand as an MP, (or, in view of the current Underground dispute, a Trades Union leader)

report this

Sean Narey

Nov 30, 2010 at 13:42

Dear "I've had enough" I would rather be boring than hide behind a pseudonym; good luck in your endeavours.

I will take the compliment of being compared to the Bamford's though.

Sean Kelly - my personal view for supporting the ban on commission stems from the conflict of interest that it brings. Please do not tell me that the billions and billions that flowed into With Profits Bonds was not as a result of commission levels. However, the truly sad part of With Profts Bond sales was not the commission that they generated; it is the fact that the advisers who sold them in such great volumes truly believed that they were selling a low-risk alternative to cash i.e. they had no understanding whatsoever about how they actually worked. These were sold by "qualified and regulated" individuals. Had these individuals and firms not been incentivised by commission then they wouldn't have been sold at all.

Commission and poor understanding is also the reason for pension transfers and Endowment mis-selling.

Many advisers are against a ban on commission because they haven't figured out how to make a living once it has gone; once they do then the fear will subside. Many advisers are against higher level qualifications because they fear that they will fail them; that is not a good reason for grandfathering. Saying that you don't have time to study actually means that you would rather spend the time that you have doing something different.

report this

Julian Stevens

Nov 30, 2010 at 13:54

If, as Hector The Grinch would have us believe, the FSA is entirely independent of government, then why is Mark Hoban, a government minister, defending in Parliament the FSA's (obdurate)position on the RDR? Well, not so much defending. More like ignoring pretty well all the arguments put forward by his parliamentary colleagues and reciting a standard response obviously prepared for him by the FSA.

Please explain, Hector (or Adair) in less than 100 words in what single way, apart from how it raises its funding, the FSA is in any way independent of government. This is one lie which, no matter how often you trot it out, will NEVER become accepted as the truth.

report this

Ron Jones

Nov 30, 2010 at 13:55

Interesting to hear MPs who do not earn as much as the 200 higher ranking FSA employees had a firmer grip on the service IFAs give and the general industry than the FSA who are in this as their day job. It makes us wonder how many of the FSA staff prior to being in the FSA ever had financial advice from an IFA let alone experience in the industry.

If I was one of the FSA staff on those higher wages I would be ashamed.

At least Hoban turned up at this meeting expecting trouble and was sensible this time, although he said a few things which were incorrect and I think he was unaware of his errors, he maybe has to much faith in the people passing him this info as it makes him look stupid.

report this

silver

Nov 30, 2010 at 14:09

Sean Narey,you need to wake up and get a life,sounds like you need a girlfriend or boyfriend to keep you occupied,what pathetic and arrogant statements you make!

Accountants,Solicitors and Nurses dont need to requalify,indeed, would you turn down a nurse at 60 who's treating you for a heart attack due to her not having up to date qualifications? I doubt it.....She would have forgotton more than you will have ever learn't with your head in a book!!!

Experience,integrity and honesty...can someone point me to the CII chapters which discuss this ? No dont bother Im already losing the will to live.

Some interesting reading on this site but some IFA's are just so far up their own its unblelivable....far to many New Model wet behind the ears kids who wouldnt know advice it it came and slapped them in the face.Yes we want to sit on a big fat salary and churn out reams of paper AKA..... RWL's

Fiction

There is a sign above my door stating ''Charity''

Fact

As an IFA I am a salesman and proud of it.

I sell advice to make money

I sell strategy to reduce tax

I get out of bed each morning to earn money to pay for the finer things in life

As a business owner Im here to generate revenue to pay my staff and keep them in jobs

What on earth is wrong with the word ''Sell''

I am sick and tired of the sanctimonious crap written on this site from the ''Do gooders'' who think we are taken in by their spouting about how they care for their clients and how exams are the be all and end all.Do they get paid at the end of the month,do they go to work for nothing ? No!!!!

Far too many idiots who cant wait to get their picture in lights on this site and all they do is spout what they think everyone wants to hear,very boring

Oh well off to sign up a nice fat bond @7%,deposit for my new apartment on the South of France...Not alllfff pop pickers!!!!!

Happy fee hunting!!!!!!....losers

report this

Scared stiff of reprisals 1

Nov 30, 2010 at 14:20

Hey ho Silver. Calm down or you will need that nurse to sort out your heart attack.

report this

Simon Honey

Nov 30, 2010 at 14:28

I agree with most of what has been said above.

Has anyone give much thought to the new blood that would like to join our industry and have the right level of qualifications but no clients or maybe a few.

How do they survive when there is no commission option as I am certain that most clients will not pay fees or be able to pay fees high enough to allow the adviser to make a living.

Secondly will new clients want to deal with a newly qualified adviser or someone who has many years of experience with the same level of qualifications as the newer adviser. I guess most will go with the experienced option.

So I do not really see many new entrants to this industry unless they have a large pot of gold to keep them afloat in the early years, or will the Banks lend to them at ridiculous rates of interest!! If at all. It is bad enough for well established businesses to get finance what does a new entrant offer!

I think the whole exercise is designed to reduce the IFA population, and make the FSA's life easier, but what do I know.

report this

Ive had enough !!!

Nov 30, 2010 at 14:29

Sean Narey . aka the taxi driver

Small ego me ,anyway who you charging for your time why you on the blogs.I presume you charge by the hour , are you like a taxi driver only paid when you got a client in the back

Me, FUM (adviser charging/commision) dont care what you call it,

report this

John Head

Nov 30, 2010 at 14:32

QUALIFICATIONS - I do not have a problem with people being able to exhibit sufficient knowledge to do the job. Trouble is the industry needs ongoing technical teaching which used to be supplied by the Life Companies - not since vitrually all of them retreated to cheap telesales manned by people who have very little knowledge (of English and Technicalities!). I cannot see that CII or IFS can supply "on the ground" development.

FEE-BASED ADVICE - ISA's & Oeics have effectively been fee-based for years - trouble is the Bancassurer's & Tied Agents Advisers never use them. Much better to have an Investment Bond (taxpayer or no taxpayer) which give 8% commission up front. & no ongoing service commitment. There used to be a thing called the Maximum Comissions Agreement (MCA) until 1988 which, in a proper format, was all that was need to stop the misselling of products by comission-greedy individuals.

report this

Ive had enough !!!

Nov 30, 2010 at 14:35

Silver

Me just booked my skiing trip over the new year holiday ,in France.

You got a place in the Alps?

report this

Jonathan Kirby

Nov 30, 2010 at 14:36

I wondered what qualifications Mr Hoban has so tried Googling and came up with his not unimpressive list.

However, what amazed me is that in 2005 he was 'doing his nut' because you can't find a dentist in Fareham.

Why, because they all went fee paying AAAAAAH

report this

Bob Wilson

Nov 30, 2010 at 14:38

Given Mr Hobans scripted and inept 9 minute rebuttal of a host of MP concerns was this proof of the death of democracy in the UK?

report this

Andrew Visser

Nov 30, 2010 at 14:42

Will the last one to leave please turn the lights out

report this

Sean Narey

Nov 30, 2010 at 14:46

What's wrong "i've had enough"; feeling a bit threatened; need to try and justify your life's work? You always know when an argument is won when the responses become aggressive. If my "arrogant" comments are too complex for you then perhaps a little bit of studying and a little less skiing will serve you well.

Personally, i'm not into 60 year old nurses so you can have them all if you like; i'll stick to the younger, more attractive and more recently trained ones thank you.

report this

Sean Narey

Nov 30, 2010 at 14:55

Oh and Silver; good luck with your income for 2013...

report this

Alan Lakey

Nov 30, 2010 at 15:01

Silver

Well said...I couldn't have, etc, etc

report this

Ive had enough !!!

Nov 30, 2010 at 15:03

Taxi man

already Level 4, not lost anything? You ok? does your boss know your blogging?

report this

Sean Narey

Nov 30, 2010 at 15:17

I've had enough; are you still hiding your identity?

report this

Ive had enough !!!

Nov 30, 2010 at 15:56

Yep!

Then i dont look silly

Come on Gavin, give the man his spread , I look forward to reading it.

Sorry Sean take it back,your web page says you will take commision.

report this

Karen Malin

Nov 30, 2010 at 16:19

Well, I sent my local MP a message about the FSA, he received what looked like a standard photocopied reply from Rt Hon Mark Hoban which advised that the FSA are an independent company limited by guarentee [I know this I teach about it!] and that the government has no control over them, it then gave the contact details for the FSA complaints department! Says it all really - who is in charge? Perhaps he thought the letters ACII were some kind of catering qualification.

report this

silver

Nov 30, 2010 at 16:25

Im not anticipating working past 2013 Im going to sit back and enjoy my trail in the sun and in the snow.ahhhhhhh.....Im leaving it all to the ''New model'' advisers,they have all the answers these days.

Ive had enough....yes i have a place and ill be enjoying some much needed fun on the slopes very soon,a bit of sun first though!!!!!

Sean,you make me laff,you sound like a man who has to have the last word,cant stay off the Bloggs and constantly seeks attention...Give it up man!!!!

Anyway some decent constructive stuff here today and Im feeling rather better after that rant,maybe another one sometime when I get chance to induge in this site again

report this

silver

Nov 30, 2010 at 16:25

Im not anticipating working past 2013 Im going to sit back and enjoy my trail in the sun and in the snow.ahhhhhhh.....Im leaving it all to the ''New model'' advisers,they have all the answers these days.

Ive had enough....yes i have a place and ill be enjoying some much needed fun on the slopes very soon,a bit of sun first though!!!!!

Sean,you make me laff,you sound like a man who has to have the last word,cant stay off the Bloggs and constantly seeks attention...Give it up man!!!!

Anyway some decent constructive stuff here today and Im feeling rather better after that rant,maybe another one sometime when I get chance to induge in this site again

report this

Anitaki

Nov 30, 2010 at 16:31

@ Karen "..........and that the government has no control over them"

This is an amazing admission. Yes, we knew it, but a strange admission nonetheless as it was "the Government" (a Tory one) who set them up in their Canary (Ivory) Tower

report this

Ive had enough !!!

Nov 30, 2010 at 16:56

Silver

Before you slope off,what you doing about the higher rate tax? Looks like EFURBS are finished and not sure about EBTs.

Im looking at a BVI though, MPs are their you know.

report this

Karen Malin

Nov 30, 2010 at 17:00

@ Anitaki - perhaps they accidently gave them too much power... my queries were around the vaguaries of the rulebook. The FSA seem to have no idea what financial advisers and insurance brokers do and/or they are somewhat heavily influenced by the big banks! Seems MPs don't know what it's all about either fro what I hear of the debate. Talk about your life in their hands!

report this

micky mouse

Nov 30, 2010 at 17:15

Hoban is a puppet of Turner/Sants fethering their own nests. The Leviathan has been out of control for years but now everyone can now see it.

report this

michael hollingdale

Nov 30, 2010 at 18:03

Sean Narey -

Dear Sean - try getting in to the real world -

I am 67 and have a superb client bank, enjoy my job and have done a fairly reasonable job for all of my clients over some 37 years - I am not a threat to the general public since I only deal with existing clients and a few referrals.

It is a fact that, along with probably another 10,000 over 60s and indeed yourself, we have all been trading and authorised by FPC 1,2, and 3 and will be until 2013. I have been trading also authorised by FSA, PIA, Fimbra and even NASDIM since 1979.

If you were to consult with educationalists in whatever form you will find out that it is a recognised fact that as you get older it is more difficult to learn and retain information - it certainly becomes more difficult after 60. So, since I am no longer a threat to the Public, have done and continue to do a reasonable job for clients why not Grandfather me through - I will have finished probably in 5 years - maybe with fantastic luck I might continue for 7 but in 10 I will surely be gone. If anyone has any doubt about my ability to continue then take the trouble to meet me and some clients, see what I do, how I do it and then decide if I am capable or not - I am very capable.

Finally, I am authorised - I do like to refer to an extract from a paper written by Peter Hamilton QC who is not entirely sure that what the FSA are doing is legal - apparently they cannot cancel my authorisation simply because they have changed the qualification requirements - even the fact that they have given supposedly ample time for me to re qualify does not necessarily mean that they can legally cancel my authorisation. I keep up to date with changes in legislation by way of CPD and if there is a gap in my knowledge regarding any business to be done I have ample resources to enable me to find the appropriate answers.

I am a very reasonable sort of guy - it would appear that you are considerably less so - come and meet me - see what I do and when you have the full facts regarding my past, present and future then decide whether I am capable to continue advising my clients or you can tell me how I am likely to fail them and indeed why I should be shunted out of an industry which I have been a part of for 37 years plus.

I look forward to an interesting meeting - come educate yourself -

report this

Richard

Nov 30, 2010 at 18:26

Michael

Good on yer sport - as the Aussies might ( not) say at the Gabba!

Well and articulately spoken. I expect that the Sean Nareys of this world have more than "a hint" of the bureaucrat in them and enjoy seeing a nice box ticked - in this case

exams good - no exams bad.

Old bad - young good .

Old + no exams - dangerous - young with lots of exams the perfect modern adviser - proof against all bad advice

Knowing the rules and the products and the taxes down to the last comma - doesn't provide one iota of common sense in applying them in my experience. - But it doesn't half make the Neary men box tickers feel better.

report this

Sean Narey

Nov 30, 2010 at 18:48

Michael, it seems to me that I am in the real world and that you don't want to join. Our "industry" is responsible for a string of major cock-ups and improvement is needed. One of the most obvious flaws is that the standard for qualifications is so low that you can become an IFA within six months of joining - do you think that this is good enough? I don't and I never have. Another obvious flaw is that many advisers have acted in their own interests when dealing with clients and have focused on commission not advice. I have worked at four different companies and seen four different models; the bad really are very bad.

Whilst qualifications are not the be all and end all; they are an important part of improving the quality of advice that is provided to customers. There are clearly other areas that need to improve too including the quality of regulation.

Your point about the ability to pass exams at age 67 may be true; i don't know becuase I am 36 but I would ask you this. Why have you never bothered to sit some of these higher level qualifications in the last 37 years? The RDR may be relatively recent but if you cannot accept that FP 1, 2 and 3 are just totally inadequate to arm you with the knowledge required for this job then you should look to yourself rather than others to find blame.

I have been called arrogant, young and foolish (I liked that one) and now you suggest that I am unreasonable. What is unreasonable about wanting better standards for clients? In my view; it shows a greater arrogance to suggest that 37 years of "doing it" should somehow make you a special case. The industry needs to change and change quickly, grandfathering will simply hold back such change and you may well be a victim of this but how reasonable is to expect the rules to be written to fit around you?

I'm not entirely sure that a trip to Sussex is very practical from Leeds but I would have no objection to meeting you; I am sure it would be educational for more than one of us.

report this

Tony Clarkin

Nov 30, 2010 at 19:25

I propose that Micheal and Sean should meet up and that Citywire should film the whole encounter as a pilot for a new weekly TV series.

It would have the same culture clash appeal as Wife Swap or Beauty and the Geek.

If it takes off It it could make someone a fortune

report this

silver

Nov 30, 2010 at 20:11

Dear oh dear here I am again at 7.45pm,thank god its not a night studying and losing the will to live reading CII rubbish

Sean I think you have now answered my questions,AGE 36 and worked for 4 companies,some good some bad.I would really be interested in your personal driver and what made you move from one job to another,it would also be interesting to know just how much you earn each year? Are you employed or self employed?

I employed someone like you,similar age and could pas exams with his eyes shut,great I thought but he couldnt sell to save his life and his attention to detail when dealing with clients was shocking.

In my experience in this job the ones who could pass exams and the techy guys where the ones who end up in compliance or networks because they have no clue how to run business,sell or apply the knowledge they have,this is fact and I doubt it will change.

Personally I think your missing the point,have you forgotton that with experience goes life experience,dealing with never ending and differing circumstances for client after client,when the knowledge is not there you go and find it adding information to your knowledge base as you go along.Add to this CPD,testing,workshops,training days and knowledege gained dailey via research through the many information bases available.

Passing exams is nothing more than evidence you can answer a set of questions at any particular given time,it does not show you can retain the knowledge long term and more importantly it doesnt prepare you to put that knowledge to work in front of a client.

Application of the knowledge is more important than passing the exam,this is a vital skill aquired over many years when dealing with a varied client bank.

You are dreaming if you think exams will clean the industry up,in case you didnt notice whilst your head was stuck in a book somewhere it was the FSA that systematically failed in their regulation of the biggest financial failure ever,IFA passing exams would not have stopped this,it wasnt anything to do with miss selling.

If you listened to the debate last night you will have taken the following points on board,the IFA sector is responsible for a very small portion of complaints and this figure is falling,the banks are responsibe for most miss selling and this figure is increasing,now can you explain where exams would have played their part in these figures and what differnce they would have made to the banking sector flogging bonds and and PPI .

It may surprise you but I am below the average age of an IFA,I own two business one being an IFA and count myself as someone who provides a superior service to my clients,having further exams would not imporve the service or offering we provide.

I spend less and less time with clients these days with more time spent on compliance and learning,this does not produce further revenue this just protects the business.If you add further study time then I dont know when I will get time for myself.

You need to consider some of the valid points raised on this site prior to slagging off other IFA's without the exams,you need to understand that your exam pass will not pull in clients and earn revenue.

I think that provides you with a more balanced view and hope that in future you think before you type.

Thats me done for a few months now

Silver

report this

michael hollingdale

Nov 30, 2010 at 20:15

Well Well - SEAN -

Nice to have a bit of banter - just a few observations -

You know of the FSA - possibly PIA - maybe maybe not FIMBRA but certainly not NASDIM, that is too far back -

You cannot have been in the industry too long at 36 - 4 jobs in our industry at 36 - is that a good track record - I had 6 years with one, 22 years with my own brokerage and now subsequently 9 years with my current arrangement.

You make the comment about those nasty selfish IFAs looking after themselves - 2% of complaints against IFAs huge numbers from banks and others - you may have met some nasty ones through your early years as an IFA but if you have, then perhaps you should have been more careful with whom you associated.

I agree with you that years of experience does not necessarily mean good advice but then neither does qualification - I am sure you would agree that probably 90% of qualification content has very little to do with the everyday activity of the normal IFA - if you agree then why bother, if you do not then please advise me otherwise. In addition, if I do have any shortfall in knowledge in respect of my everyday activity I certainly know where to get it.

Regarding my obtaining qualification and not bothering - I did study for JO5 - I read and read, took a weeks holiday with my wife to Italy and spent 3 hours each day with my head in the manual - I attended 2 seminars on JO5 a couple of weeks before the examination. I realised that I was in no way ready for the examination and duly scratched.

I do not think you are arrogant, maybe a little naieve, but I am a little disappointed that you think I am arrogant and believe that I consider myself a special case - Try reading Peter Hamiltons article -

Finally, the real problem that I have is that you are automatically lumping me and thousands of IFAs nearing the end with a few unscrupulous ones.

May I be treated with a certain respect - visit me, if I am wrong, if I am a danger to my clients, then strike me out but please somebody out there, since it all seems to be about so called 'consumer protection' do me the courtesy of an inspection -

If the FSA were to inspect my activity, past and present they would see that I am doing an ethical and worthwhile job and looking after many happy clients - no worry about selfishness and miselling -

Be reasonable Sean - you may grow in to a very successful and tolerant IFA

report this

michael hollingdale

Nov 30, 2010 at 21:02

Sean -

One other point - you refer on a couple of occasions to the FP 1,2 or 3

It is of course FPC 1,2 or 3 Financial Planning Certificate

report this

John Brady

Nov 30, 2010 at 23:05

I'm already level 4 and will be on my way to Chartered when I can motivate myself again, having spent two years in one book or another I still dont have a problem with exams. I do have a problem with how I will not be paid in the future though.

report this

John Brady

Nov 30, 2010 at 23:05

I'm already level 4 and will be on my way to Chartered when I can motivate myself again, having spent two years in one book or another I still dont have a problem with exams. I do have a problem with how I will not be paid in the future though.

report this

Man in Black

Dec 01, 2010 at 08:34

@Michael Hollingdale

No! The individual units were named FP1, 2 and 3...the overall certificate was FPC.

report this

Sean Kelly

Dec 01, 2010 at 08:40

Sean Narey. You keep referring to cock ups in our industry. The majority of these were caused by banks and life office agents not ifa's. This is a fact that you and the FSA and Mr Hoban seem to keep missing and have decided that IFA's must pay the price as the FSA hasn't got the resources or the will (after all the top men do seem to move between the FSA and Banks and back again) to take the real culprits to task.

Wouldn't it be nice to have someone from an IFA background at the helm of the FSA.

report this

PD Off

Dec 01, 2010 at 09:55

Sean Narey.

As you have to change jobs about every 4 years, can I suggest that next time you apply for a job at the FSA. You appear to have in abundance every attribute that they hold dearly

report this

Ive had enough !!!

Dec 01, 2010 at 10:16

Sean Narey

Your companys mortgage arm fined, so much for exams

report this

Anitaki

Dec 01, 2010 at 10:45

Many of the "cock-ups in our industry" were caused by setting "targets" for bank, B. Soc. & life office staff > this led to "overenthusiastic" selling. ln many cases this was purely to keep their jobs as only the employers really derived the benefit.

"Targets" and "best advice" are not and never will be compatible bedfellows.

report this

silver

Dec 01, 2010 at 11:19

Sean

Four jobs in four years sounds familiar to me.

Ill pass an exam every year to add to my CV which will inturn enable me to change job each time for an enhanced salary,doesnt really matter if I can sell because Ill be off to my next job before I can be managed out.

Its good to see you concentrated on client retention and customer service,NOT.Looks to me like your sole goal has been to pass exams and get a better salary

Can I suggest and agree with the earlier post.Go and get a job at the FSA as your logic and narrow minded approach may well be put to best use in an organisation run by numpties.

report this

Plashfacker

Dec 01, 2010 at 11:55

Go Narey Go Narey. (The more they bite, the better you are)

report this

Rosemary Heaversedge

Dec 01, 2010 at 11:56

to be repetitive - at present, the only information that seems available about advisers from the FSA is that they are CF30 Customer. Any history has not been updated and so the general public have NO means of finding out any background on an adviser.

Why is the FSA not immediately helping the public by having current qualifications on its website if, apparently, they are so important.

report this

Rosemary Heaversedge

Dec 01, 2010 at 11:56

to be repetitive - at present, the only information that seems available about advisers from the FSA is that they are CF30 Customer. Any history has not been updated and so the general public have NO means of finding out any background on an adviser.

Why is the FSA not immediately helping the public by having current qualifications on its website if, apparently, they are so important.

report this

Rosemary Heaversedge

Dec 01, 2010 at 11:56

to be repetitive - at present, the only information that seems available about advisers from the FSA is that they are CF30 Customer. Any history has not been updated and so the general public have NO means of finding out any background on an adviser.

Why is the FSA not immediately helping the public by having current qualifications on its website if, apparently, they are so important.

report this

Tony Clarkin

Dec 01, 2010 at 11:57

That certainly was repetitive

report this

Sean Narey

Dec 01, 2010 at 12:01

Dear "I've had enough" - you really do need to check your facts don't you. Myself and 3 others bought my firm in 2008; the sister firm (mortgage arm) was fined in 2007 and was run by a completely different set of individuals. We wound the firm up within two months of taking over and none of the individuals remain within our employment. The mortgage arm is now dormant. It's nice to see that you prefer to try and discredit me rather than debate the facts. Better luck next time.

PD off - i'm hardly likely to be looking for a new job when I own my business am I.

Sean Kelly, please don't pretend that IFA's are blameless in the pension and Endowment arena; they are not. Continuing to make out that IFA's are innocent and that it's all the fault of the banks, the FSA or the Life Offices is just childish. When you seek professional advice from a lawyer, an accountant a dentist etc you expect them to be well qualified to provide their services. Why do you believe that it is OK for our profession to have such basic qualifications in comparison? If you want to ridicule those of us who have sought to improve our knowledge then I would suggest that it is your own insecurity that drives you. If level 4 is beyond you then I make no apologies for suggesting that it is time to look elsewhere for your employment.

As for experience; this is no proof of anything. Wasn't Harold Shipman a very experienced doctor? (with qualifications too of-course).

report this

Ive had enough !!!

Dec 01, 2010 at 12:02

MIB, not was ,is

report this

Sean Narey

Dec 01, 2010 at 12:37

@Michael Hollingdale

There was a specific reference in my post to you that indicated that you may well be a victim in all of this. However, lines need to be drawn somewhere and I am sure that you would expect that the FSA cannot implement rules that allow a wide variety of parameters. If you can persuade the authorities that a site visit and inspection is better proof of your capabilities then that would be great but I think that we both know that this would be expensive and unworkable; it would also mean a lot more FSA employees (I'm not sure that they would just take my word for it if i carried out the inspection).

It does seem a little at odds that you indicate that your age should be a suitable excuse for not having to sit exams but that your age should also be the reason why you should be allowed to continue. I would suggest that you are asking to have it both ways.

I'm more than happy with Tony Clarkin's suggestion though; I'll be the geek (naturally).

report this

Sean Kelly

Dec 01, 2010 at 12:49

Sean Narey. I did not claim that IFA's were innocent but the facts speak for themselves that the vast majority of complaints were against the sales agents of banks or life offices. And yet the FSA are bringing in measures that will send clients running to the same culprits for advice.

As for qualifications I have no problem with improving levels of knowledge. Personally I am already level 4 holding both G10 and G60 and I am well on my way to chartered status. I actuall enjoy taking exams and do not agree with the argument that age is a barrier.

As for exams. They are proof of nothing - Didn't Harold Shipman also hold medical qualifications and take the Hippocratic Oath and don't most solicitors and accountants who defraud clients also hold qualifications?

I personally agree that if I was talking to a financial planner about Inheritance Tax Planning I would want them to hold relevant qualifications. But how many clients out there actually need this level of advice?

As for employment we are mainly fee based so most of the proposals will not impact on me. However, I cannot support something that I cannot see will benefit the vast majority of consumers (how many people out there have to worry about IHT or the changes to pension contribution limits).

report this

Mr Ed

Dec 01, 2010 at 14:00

Crikey, this debate is running away with itself - and little to the credit of many commentators, who've injected some unwelcome vitriol.

Interesting to see the criticism of Sean's career as someone who would chop and change roles as he can't "sell" - slip of the fingers, or a subconscious admission?

Qualifications aren't the be-all and end-all; but neither is experience. What is needed is a balance, because both serve to drive a superior customer experience.

But, whilst some may criticise the younger members of this community for taking their exams and lacking the decades of experience, that can still be readily obtained; the refuseniks rather dent the merits of their experience by refusing to admit the benefits of any objective standard for measuring the quality of it.

Whilst the talented amateur has been a vaunted part of British history, it's not something which holds much water - if we're claiming to be professional then we should subscribe to the need to maintain and evidence that professionalism.

The good news is that the latest research shows most of us are doing so - which makes half the grumbling here either just so; or the last words of those who've made the choice, conscious or otherwise, to exit.

report this

Sean Narey

Dec 01, 2010 at 14:49

Ok Mr Ed; that's what I was trying say.

Sean Kelly, we are clearly closer to agreement than it seems. However, the bank advisers will have to be level 4 too so this is not an attack on IFA's. Whether the banks will be in any way restricited by a ban on commission remains to be seen but rather than focus on the flaws in RDR; we should embrace the fact that it will take us closer to where we ought to be. If you don't agree then please put your proposals forward. I accept that the rules will not suit everyone but drafting legislation is not that simple.

In terms of providing complex advice; I am not entirely sure that the Level 4 qualifications will arm anyone to give quality advice on IHT and more complex pension planning and that is why the AF papers exist. If you truly believe that you would allow someone with only the FPC to advise someone on their life savings (even if it is just £20k) then I am never going to agree with you. This is not the complex end of the spectrum but all those pensioners' who are trapped in under-performing With Profits Bonds (sold by IFA's) are there because most IFA's do not have a clue how they actually work; at least the Level 4 qualifications will go someway to ensuring a basic understanding of asset allocation and different asset classes before advisers are allowed to ruin someone's retirement. Having worked at Skipton Financial Services in my first role; I know exactly how ill-advised a large number of advisers are and how little they know about Financial Planning (as opposed to product selling).

People keep refering to the number of complaints in the IFA community being low. Complaints are low because most customer's wouldn't have a clue that the advice that they received would have been better if commission wasn't involved (back again to With Profits Bonds being recommended as an alternative to cash or Distribution Bonds being recommended instead of Unit Trusts); hence we have TCF as a direct result of the FSA realising this point.

Perhaps one's perspective depends on the type of clients you deal with; I am not bothered about what banks do becuase they are welcome to clients who cannot or will not pay fees and will undoubtedly be shafted as a result.

report this

Jonathan Kirby

Dec 01, 2010 at 14:54

If 'most' are taking exams, this could still mean 49% aren't.

report this

Ned Naylor

Dec 01, 2010 at 16:37

Oh dear, here we go again, one IFA second guessing other IFAs advice processes and condemning WP bonds in favour of UT or Distribution bonds.

if a client is at the lower end of the risk spectrum but still wants to benefit from potential growth via a mult asset investment the WP fund in general will suit them, substituting WP for a distribution fund only increases the risk to capital, and as for UTs they do not offer any form of protection against sequestration by the authorities for LTC costs in later life. Life Bonds do not qualify under CRAG rules as part of the assessment process for LTC costs as there is a Life Assurance Disregard because of the death benefit. So who in their right minds would want to put their capital (and of course their beneficiaries inheritance ) at risk from LTC costs.

I look at the example of my Mother in Law, who only had investments in Banks and building societies prior to her daughter being appointed by the PGO to look after her financial and care interests due to her lack of capacity.

She paid over a 6 yr period some £120,000 in care costs from her own money and on death paid £90,000 in IHT.

Because I was not her adviser for the 30yrs or so she and her daughter were estranged, no IHT mitigation or LTC mitigation advice was taken.

Contrast this with one of my clients who is, except for about 10% of her considerable estate, invested in WP Bonds and with trusts set up for the money she wants to leave to her niece on death, the state will have to pick up the major portion of care costs.

The moral of this is, that Financial Planning should not exclude a product simply because it does not generate a substantial return, that is the purpose of getting better educated and I have no beef with that as I have said all along, life is more complex now, tax avoidance advic is a necessary part of our work as are other issues for older clients such as LTC mitigation

What I do object to most vehemently is the imposition of the commission ban nont being across the board, and that this method of remuneration has for two decades nearly always been clearly disclosed and set out in Illustrations etc.

An unelected, unregulated body, formed as judge, jury and executioner, with a rule book so complex even the most well versed legal minds struggle with its complexity and ambiguity is telling me that I have no right to give clients a choice of whether to pay for advice on the drip funded by a provider to avoid the necessity of going to the bank for capital funding. What a daft way to run an industry.

One final point, what is the difference between payment of commission on a distribution bond, compared to a WP bond ? what makes one right and another wrong.

i know there are a few tossers out there in our sector who behave badly, but what makes you think that they are going to act any differently when RDR comes into effect.?

Cheats, crooks and liars always find a way to pursue their trade.

report this

Ive had enough !!!

Dec 01, 2010 at 16:40

Well Shaun at least you have now calmed down a little.

Exams are fine, but I agree will the total crap which is out their ,both by the highly qualified and not so! I have seen both , a chartered guy with his life planner ( very nice ) selling keydata Arc cru ( it was top of the cautious managed sector ?) desperate to earn a living.

It seems to me that crap advice is given by the desperate, not the level of qualifications , trying to run a business when they are not capable,this goes back to the direct sales days.

I would like to see proof of their business acumen before allowing them on to the public, I see some of the turnovers and wonder how they can run a business ,talk about a cottage industry.

My greatest hope is that all who wish to stay in our great industry learn how to run a proper business, exams do not stop the desperate

report this

Sean Narey

Dec 01, 2010 at 18:03

Ned, I think you mis-read and therefore mis-understand my point. Many advisers have sold With profits as an alternative to cash (not Distribution bonds). Please re-read what I wrote.

as for the LTC benefit of With Profits; this is a fundamentally flawed argument. By protecting your assets from the Local Authority you will be putting your relatives in an Authority funded care-home...have you ever seen one!! Most clients would prefer to fund for care that they pay for if they have the option as Local Authority funded places are the pits.

You should also consider that if client's need income then regular withdrawals from your beloved With Profits Bonds will be used in the Local Authority calculation and capitalised so you won't be sheltering anything! Finally, if you are still telling your clients that With Profits Bonds are less risky than Distribution Bonds (when they generally have similar asset mix) then you are just fooling yourself. Just because the actuaries hide reality from the investor doesn't mean that they aren't losing them money; there are many investments that can lost 20% in one day when the market rises!!

report this

Stratfield

Dec 01, 2010 at 18:12

Hear hear Ned Naylor. At last someone has grasped the nettle of what being an IFA is all about. There are too many IFAs who think they are fund managers and are seduced by alpha this and beta that....that's NOT what being an adv iser is about at all ! We sit on the client's side of the line, get to know them intimately through good times and bad for many many years. How many "professional" solicitors and accountants do that? Quite simply...they don't and I can't think of any other profession that does either.

Two years ago when I was with a client I fixed their central heating whilst I was there; the bloke who has serviced it (for a fee) 3 days previously had "carelessly" turned the boiler stat down (in January). I bet he ticked all his boxes though.

What Ned has mentioned can only be gleaned by experience and there is no way he could document his advice re CRAG for fear of falling foul of delibrate deprivation rules !! How would the box ticking FSA cope with that then? And the reason that there are so many different product types out there is because people are different and have different tax statuses and attitudes to risk. That's what the fact find determines isn't it? As to the with profit argument (ie advisers not fully understanding them), show me an adviser who purports to fully understand ANY investment product and I will show you a liar. Our job is to advise on a thousand issues (including the massive commission paying premium bonds) and recommend the most appropriate product IF THERE IS ONE. A with profit product was marketed as a product to better the building society in the medium to long term without losing capital. END OF. You simply cannot compare them to any other product if security of capital is a desire of the client. Don't get me wrong, I hate the bloody things and have only ever sold (ooh, dirty word) two in 20 years, but they filled a gap in the market (funny that). Show me a unit trust that could do that ( A zero maybe?)

As to exams, I am all in favour of them. However no-one has picked up on what I wrote earlier about timescales ! The government's own website states that (of QCF) "You can study units at your own pace and build these up to full qualifications of different sizes over time."

|At your own pace eh? Well who will tell the FSA? Not that they would takeany notice because they are independent ! It is grossly unfair of the FSA to insist on a ridiculously short timescale, and arrogant beyond words (and possibly illegal) to say that IFAs cannot practice without an arbitrary ( yes it is) level of exam passes by end of 2012. And it's their arrogance that makes me fume the most. It starts with good old 20% Hector and pervades down to the lackey Hoban. (The vision of the latter sat in the house of commons the other day sneering quietly during the debate made my fingers itch). If the FSA were the Met it would be accused of institutional racism against IFAs.

Exams are useful but they have to be relevant to be credible; experience is useful as long as it's relevant and some notice should be taken of it and a level of grandfathering introduced. The FSA must be taken to task for the RDR ( if only on grounds of cost!) and given a bloody good shake. I doubt however that it would ever happen.

report this

Stratfield

Dec 01, 2010 at 18:25

Sean

Are you sure you want to stand by your last paragraph ?

report this

Sean Narey

Dec 01, 2010 at 21:21

@Stratfield; if I had written it properly I would stand behind it 100% percent. With Profits Bonds hide reality and nothing else. An investment that would generally hold 60% in equities is as risky a product as another investment that holds around 60% in equties. The investment mix of With Pofits and Distribution funds are similar so how is one less risky than the other? Is it because the client doesn't get to see market falls unless they ask for their cash back? Take away the few products that offered MVA-free clauses at given points in time and show me where the capital guarantee is. Alternative to cash my backside. If you think there is no risk, perhaps you should discuss it with the investors in NPI, Scot Mut, RSA etc.

report this

Stratfield

Dec 02, 2010 at 00:04

hey Sean, wind your neck in a bit ! If you read what I said you would interpret that I have no love of with profit anything, but when they were selling like hot cakes ( and I would guess when you first entered this industry) there was no alternative investment for a client who did not want loss of capital or fluctuations. A distribution bond could not offer the same guarantees. However if you have a compliance department that would allow you to arrange a distribution bond to such a client then lucky you, mine would chuck it straight back at me and send me to bed with no supper.

However, the with profit bit wasn't actually the part of your last paragraph I was referring to .

report this

Ned Naylor

Dec 02, 2010 at 10:35

Oh Sean Neary

If you do not protect your clients assets from sequestration by the authorities for LTC costs then you are not looking after them and their family as their agent. IFAs according to the FSA, are primarily agents of the client.

On the issue of funding for LTC, if the local authority has to pay, the patient has the right to request they pay for private nursing care and top up to meet the fees deficit. Had this been done for my mother in law, (the example I quoted) then all she would have had to pay was the difference between the statutory funding level and the care homes own fees. (about 75% less than she got screwed for)

I have yet to see the asset mix of a WP bond, meet the asset mix of a Distribution Bond and as one of the most consistent and better WP products on the market has been the Prudentials,

Naturally for many years, IFAs have had the choice of whether to charge a fee, reduce commission, enhance allocation or reduce AMcs through commission sacrifice etc etc, it is down to how a sensible approach to these matters resides in the advisers ethics and his /her own integrity.

We do sell products, no getting away from it, regardless of our method of remuneration, so called commission bias does exist in some advisers modus operandi, but what the hell, if they were fee based, they would probably overcharge anyway.

What works is what is best for each individual, no templates for good advice.

How would you feel if you had arranged a Low Risk Unit Trust (3% commission naturally at this stage as an assumption) and then found out that the elderly clients family deemed your advice incompetant because you had not considered the effect of the Life Assurance disregard under CRAG

All about experience, coupled with technical knowledge gained over many years of dealing with the public, all the FSA has had to do is issue edictts, demands for even more funding from us, without having to demonstrate any fitness of purpose or valule for money. What a wonderful service to the industry that has been to date (not)

report this

Sean Narey

Dec 02, 2010 at 11:47

Ned. Again, I agree with 90% of what you are saying (no template for good advice)but what asset mix do you think With Profits Funds have? Traditionally, 60-70% in equtities and then a mix of Gilts, Bonds and Property. Distribution Funds are usually lower in equity but not much and don't generally have property. Prudential have clearly shown that they are able to manage With Profits properly but they stand alone and have only delivered the returns that their asset mix dicates; the rest is just marketing and spin.

As for the LTC argument; have you actually seen this work in real life? One of my clients was categorically told that her local authority would only provide funding in one of their "panel" of homes and would not pay their bit towards somewhere nicer. As for not seeking to protect assets from LTC and IHT etc; of-course that is what we seek to do. However, the value of most people's homes is usually sufficient to make LTC protection very tricky and the need for income in retirement should (in my opinion) take preference. If you need income, the With Profts Bond route is of no use (check the CRAG guide from 19 march 2010)There is of-course the deliberate deprivation rules which could also make the use of Life Assurance Bonds futile anyway. Each case on it's merits as you say but LTC protection as justification for With Profits...I just don't agree. Let's see how many With Profits Bonds are recommended when they don't generate commission anymore.

report this

Sean Narey

Dec 02, 2010 at 11:51

@Stratfield

CRAG paragraph 6.005 "income from investment bonds, with or without life assurance, is taken into account in the financial assessment for residential accomodation".

report this

Stratfield

Dec 02, 2010 at 12:22

@Sean Narey

Quite right, the INCOME is taken into account.

I hear what you say about Local Authority care homes but each case on it's merits and all that. If the client is wealthy enough to afford the fees regardless then there is no problem, but for the poor sods who have a family home and about £50-100k to fund a £600 a week care home there's no choice is there?

My mother is in a BUPA run home paid for by the local authority; they all have different ways of interpreting things. As an IFA though surely it's better to hedge your bets and (well in advance) shelter the asset just in case it works in the client's favour in the future?. That's why it's called planning and you have a legal obligation to act in your client's best interests at all times.

It's in this last respect that many "professional" solicitors have failed recently with the introduction of transferable nil rate bands etc. No need any more for NRBDWTs they say. No? What about the valuable benefit of keeping the main home out of an authority's grasp then? This is an example of supposedly professional people not looking at the bigger picture outside of their own box.

report this

Ned Naylor

Dec 02, 2010 at 15:46

To Sean Neary

Yes I have seen this work, my father was funded for residential and nursing care at the private facility at Exton Park, near Chorley and he paid extra for his own single room with ensuite.

So it does work, you just have to ensure that matters are properly laid out and in trust if necessary.

As for Pru's WP fund, good sound practical, day to day management in good times and bad have sustained their plan and they have the ability to change the asset mix at will, as they did after 9/11 for while.

Nuff said about WP funds.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

Sorry, this link is not
quite ready yet