The FSA validates fees for advice 
The key proposals of the FSA Retail Distribution Review were well trailed - here as elsewhere. The main one is a gamble: forcing IFAs into a professional business model will also push it even further into the high end of consumer income and assets, leaving an even bigger mass-market gap below it to be filled by better products and service formats. It is a gamble because this mass market space has so far been dominated (and abysmally served) by underqualified transaction-orientated IFAs and banks. Both have the worst records managing the conflicts betwen sales incentives and treating customers as fellow humans.
I will return to the gamble in respect of these groups in a later post. My first comments are on the implication that consumers will be able to trust a freshly-branded 'profession' of independent financial planners just because of collective actions, such as fees agreed with the customer (instead of commissions agreed with providers), membership of trade associations and threshold exam qualifications. There are already many firms who rightly claim all of these in their marketing literature. As insiders, what we know is that these firms nonetheless offer wildly different value propositions. The differences that count are not so much in their traditional financial planning expertise but in their grasp of the core investment skills, and consequently in their thinking and processes, as well as a wide range of differences in clients' all-in costs. Customers need to discriminate rather than rely on labels, even a fresh set of labels.
Stuart Fowler on 06.29.07 @ 08:05 PM GMT [">more..]
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