RDR’s slow motion impact on consumer confidence
Wednesday, August 7th, 2013

The RDR is already having impact on consumer confidence, according to a Cofunds’ adviser poll though while the headline figure shows 57% of advisers saying it is improving or will improve confidence, it all feels a little bit slow moving.

Cofunds asked 404 financial advisers – so statistically significant – how long they expect it to take for consumer confidence to change following the introduction of RDR. Sixteen per cent of respondents believe confidence has improved, 4 per cent expect to see an improvement this year, 13 per cent after a year, 12 per cent after two years and 12 per cent expect it to take more than three years. Meanwhile 42 per cent believe that RDR will have no impact on consumer confidence.

There is also an encouraging response to the new way of charging – which Cofunds describes as fees.

Thirty per cent of respondents to the same poll said their clients have reacted positively to the transition, while 57 per cent said their clients’ have on the whole responded neutrally. The figures roughly match responses to the same question in a poll conducted in April 2012, the platform says. However some quick Money Debate subtracting suggests there is a worrying 13 odd per cent of advisers who have clients who may not be totally happy which is something of a worry (unless IFAs no longer want those clients).

But it is the confidence part which is worth discussing here, because it means IFAs individually and as a sector may finally begin to see some benefit after all the hassle, the hurdles and the exams.

The biggest chunk of advisers who see confidence improving see it taking between a year or several years. It all feels a long way on from the start date and of course there is still a substantial minority who feel it will have no impact at all.

But while this is a very useful survey, I would really like to hear advisers’ views broken down one bit further as follows – is the RDR improving your clients’ confidence in your proposition and is the RDR likely to improve confidence in the sector as a whole? The second one is surely the killer question. If the RDR stops or significantly reduces problem sales and recommendations, fiascoes, scandals, imbroglios, call the problems what you will, then there will be a good case to argue it was worth it.

From there, it may then be possible to make a broader case for just why IFAs need to be more involved in convincing the public to save, invest and insure more (and contribute more than 8 per cent into a pension too).

By the way Stephen Wynne-Jones’ quote is quite interesting placing the blame for a lack of confidence “in the main” on providers not advisers. He says: “Advisers have proved themselves to be incredibly adept at managing to put their clients first, all the while taking everything the regulator throws at them. So it’s encouraging to see that with this latest piece of regulation their sterling efforts, in very trying times, are already feeding through to improved consumer confidence – a confidence, it’s important to remember, that was knocked in the main by providers, not advisers.”

(Providers not advisers? Would they agree at the ABI and the IMA we wonder)
Is there enough ‘advice infrastructure’ to deal with interest only problem?
Friday, May 3rd, 2013

Ernst & Young is predicting there will be 20,000 advisers by the end of this year down by another 3,000 from the current 23,000. This does not include the bank sales advice retreat. It is only a prediction but it should be in the right ball park.

1.3 million interest-only mortgage borrowers may be facing a shortfall when they come to pay off the capital sum.The average gap may be around £70,000.

Now the interest only mortgage issue isn’t a scandal nor even a crisis yet. But it is a big concern particularly in parts of the North where prices have fallen a lot and property downsizing options are very limited.

All things being equal, one might suggest the best way to deal with this would be to direct as many of these borrowers to proper advisers. is doing valiant work to do just that. But will there be enough advisers? Twenty thousand advisers – makes about 65 shortfall sufferers for each one and doing the day job. That just doesn’t sound like enough to me.

Look a real problem for real people and a real advice gap.

Simplified advice call isn’t self serving from Tory peers
Wednesday, May 1st, 2013

When Lord Flight talks about simplified advice he is genuine in trying to find ways to convince more people to save and invest. Some advisers on the comment boards see some sort of pro-bank plot, maybe with the Money Advice Service involved, but I really doubt that. Whether simplified advice would be offered through the banks or even through insurers or platforms or tacked on to an IFA, it is surely a reasonable goal to work towards. We certainly don’t want to see some sort of ‘reprieve’ from the RDR so that banks and insurers can rehire all their old sales forces. In fact, any suggestion that the RDR would allow something called primary advice without ombudsman recourse was dropped years ago. But surely it is possible to devise a very simple suite for those simplified advisers to sell. It would require some disclaimers and possibly something close to a basic approved kitemarked list with FCA approval or at least perusal. But is it really beyond our ken?

Could proper advisers could get together, devise a simple suite that meets people’s needs, make some suggestion for how the advice might work, and then challenge the regulator and policymakers to devise a regulatory regime around it, that was not too expensive and not too draconian. It couldn’t be fail safe. That would need a Government  guarantee. But it might take the debate on a little further.