14th December 2010

Norwest Recruit - RDR

IFA Letter of the week

I wonder if it is at all possible to be rational on this topic without some people getting completely hysterical.

Let me take a few of the popular arguments.

1. A 'cliff edge for qualification'. This is obviously nonsense. Those shouting loudest seem to have been in the business for at least 10 years. Where have they been? It was pretty evident since Gower that qualifications were going to feature on the agenda. Where were the objectors? Hiding in the closet? They have had years and years to prepare. I can only surmise that the reason they didn't engage was either through laziness or stupidity. That's not to say that I think exams are the 'panacea'. You only need to recall LTCM to see that it is not necessarily so. But even those who now seek to champion the cause in Parliament are pretty highly qualified. Public school, Oxford and a post grad MBA features in the CV of the leading champion. I do agree that if an IFA has a decent qualification from somewhere - a degree from a Russell University for example - then that should be taken into consideration. However I have come across IFAS who can't even claim a few decent A Levels to their name. That really is not satisfactory - is it?
2. Loss of IFAs. Your own site speaks of a 20% drop out rate. Firstly how many of those are past 60? (I am myself). This is not drop out - this is natural retirement. Also look at it another way. This means 80% are going to continue. An 80% success rate is not such a bad result. Furthermore do you really think that the 20% will be made up of the 'best' IFAs? Could it possibly be that the 20% are the least good?
3. The Public will suffer. As I have so often opined - we are not social workers. Statistics have clearly shown that there are enormous numbers of higher earners and better off people who don't have an IFA. Just as an example how many MPs have an IFA? These people are most obviously in dire need of one judging by the mess of their own finances. Perhaps those who find comfort in the 'mass market' and so loudly complain that these poor souls will be disenfranchised, don't either have the confidence or the skill set to deal with the better off.
4. This is by no means a defence of the RDR. There is a huge amount wrong with it:

No real disclosure of the new stupid divisions of simplified, basic and restricted. No straightforward and accurate definition of independence. No cost benefit analysis. No examination of the far too regular failings of regulation, the waste, the profligacy with our money, the unaccountability. These all seem to be entirely ignored and I would contend are of far greater importance to the survival of Independent Financial Advice.

May I wish all IFAs a very Merry Christmas and a successful and stress free 2011.

Harry Katz CFPCM
Norwest Consultants

Adviser Letter of the Week, RDR