That was the title of the latest Space Money Talks debate. This time we didn’t just put the question to a hand-picked panel of industry leaders, we also gave our 60-strong invited audience a chance to air their own views on this thorny topic.
And whilst the answer to the question from most contributors was a cautious ‘yes’, the true picture is naturally a little more complicated.
James Hay Chief Executive Alastair Conway was adamant that adviser firms had become more successful and better run as businesses and, as such, would not be ignoring anything that could impact on how they do business and relate to clients in future.
On the other hand, Standard Life’s Head of Adviser & Wealth Manager Propositions, David Tiller, was concerned that if the industry wasn’t careful, the FAMR reform could undermine the progress of RDR reforms and knock everyone’s reputations.
There was general agreement that advisers need to defend their reputation and make a strong case for the value of advice. But regulators could certainly help as they move forward with the FAMR process.
The tricky issue of demarcation
This fell into two distinct areas. First, David Tiller felt it important to separate financial advice from the more transactional processes. He questioned whether Robo-Advice was really advice, or simply something that was almost always linked to a product?
Lighthouse Managing Director of Workplace Solutions, Roger Sanders, suggested that advisers wanted the regulator to sort out the discrepancies between what the FCA says and what the FOS does.
Steven Levin, Old Mutual Wealth’s Chief Executive for Platforms, pointed out that advisers wanted to see FSCS fees fall if possible, and certainly become more predictable.
But A.J Bell’s Head of Platform (Technical), Mike Morrison, had a different concern. Namely that, whatever the value of the client, there remained the problem of advisers always looking over their shoulder to consider the liability attached to their advice – and potentially wondering how the scope of that liability might change over time.
It was suggested that caveat emptor would naturally help in ensuring customers took some responsibility for their decisions. But Mike was worried about leaving people to their own devices in terms of guidance, only to see them ‘owning’ those decisions twenty or thirty years later and realising they had made the wrong choices.
Is the advice market big enough?
There was a feeling from the assembled industry representatives that the current market for financial advice was large enough for the majority of advisers.
David Tiller felt there were still areas ripe for expansion, too. For example, many advisers may look to make a ‘lighter touch’ offer to mass affluent customers.
But others wondered about reaching the broader mass market. The lack of advisers had definitely increased the advice gap, said Steven Levin, and it might need ‘nudges, and simplification’ to remedy this situation.
Alastair Conway was very clear that a crucial issue in growing the market was the way the industry talks to potential customers. He felt we were failing to understand that people’s attitude to their money was an emotional one, not a logical one. To this end, James Hay was now working with psychologists to help them better understand customers and, therefore, communicate more effectively with them.
Alastair also criticised the FAMR for focusing solely on pensions dashboards. When most people are managing debt, ISAs, collectives, shares, inheritance money and cash, shouldn’t we be thinking about their whole pot, not just pensions?
The industry must take the lead
David Tiller argued that, to really reach the less well off, it might be that the government needs to take a bit more risk back on to itself. Notwithstanding the fact that, currently, everyone including the government and FS companies all want to get risk off the balance sheet.
But the final message, from both Roger Sanders and Alastair Conway, was one that no one disagreed with: our industry needs to take the initiative.
We must go to the government with solutions, not just wait for a long, drawn-out consultation process.
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