Current F/S Qualifications not guaranteed to reach RDR Standards in 2012!

Well, it’s been an historic week, in terms of Interest Rates. The Monetary Policy Committee has reduced them to an all time low of 1%, since the origin of the Bank of England in 1694, with one more push, to kick start the economy, credit & the mortgage market.

The government have now got to put real pressure on the banks, as the base rate reduction seems to be piece meal, and ineffectual without actually enforcing lending targets, reducing bonuses for bank high flyers, & actually getting them lending again. Certainly, previous reductions in Base Rate might have reduced LIBOR, but that’s about it, and has had no real effect on the economy. Maybe now the government owning stakes in most of the banks, they have real teeth to enforce these changes.

More news on the acquisition trail, the successful IFA Consolidator, Jelf Group has stated that revenue was up by 59% from September 2007 to September 2008, from £39.7 million to £63.1 million. The main reason for this, are the acquisitions of 7 solid brand IFAs during the year such as Manson Group, Clarke Roxburgh Group & Argyll Group, despite their share price reducing nearly 73% over the year. The chief exec for the group, Alan Always, said the share price falls have plummeted across the economy, but that they will be reviewing their cost base in the future!

Certainly, the mergers and acquisitions process that builds up speed week by week in both Banking and IFA sectors, will give the FSA an easier job to regulate them. I can see about 20-30 giant IFA firms navigating a fee based Financial Services landscape, with full resources to offer an holistic approach to all clients, not just HNW. The cost of this, I think, a number of compliant, passionate, professional IFAs that have left the industry in the meantime because of RDR,TCF etc.Is this the pangs of a new world order, I don’t think so, it’s a crying shame and a loss to the Industry.

No real surprise with the next snippet of news; Just Retirement sales volumes have reduced by nearly 9% over the six months between June and December 2008. Their annuity sales are also down by 13%, over this period. Mike Fuller, Chief Exec, has put this down to reduced maturity values in pensions & general market conditions, where as their funds under management have fallen due to wider credit spreads on Corporate Bonds.

Let’s look at this simply, house prices have been battered over the last 18 months, there is a lot less equity in houses generally, to give people equity release options. I’m sure there’s still a market out there, as some people have lived in a house for 35 years and don’t even have a mortgage, but certainly this dip for equity release firms like Just Retirement, isn’t a bolt from the blue!

Apparently, the F/S Skills Council has let advisers know that the existing range of F/S Qualifications don’t even guarantee them, that they will meet to new requirement under the Retail Distribution Review. The industry will have to wait until requirements are actually defined. by the FSSC, and that IFAs & advisers should be aware that the exams they are currently sitting may move them closer to diploma level, but whether that is enough for RDR in 2012 is another question.

We are in the pit of the worst recession in History, Capital Adequacy Ratios are crippling some IFAs, funds under management are falling quarter by quarter, the FSSC should quickly resolve this and at least let IFAs know where they stand on the technical side. Granted the Retail Distribution Review is important to the future of the IFA market, but certainly, many IFAs will be nervous about managing their route towards hitting these standards, and should at least know what those standards are.

IFA firms are warned about opportunistic tele-com companies!

Fascinating article in FT Adviser.co.uk, regarding IFA firms and practices being targeted by tele-com firms, claiming that they need to purchase a £30,000 telephone system to fit in with previous FSA legislation. These IFAs are being warned not to fall for this ploy. Basically, last yr, the FSA outlined guidelines and rules on certain calls being taped, to allow the regulator to investigate and enforce legislation better. However, the FSA has had to re-clarify that this doesn’t apply to all types of Financial Advisers, and that many firms are exempted and shouldn’t listen to the claims of these tele-com opportunists.

My thoughts on this are simple, we are in the pit of one of the worst recessions in living memory, and all firms are scraping for business in all sectors. These tele-com firms have latched onto this idea and out of desperation have been shall we say “economical with the truth”, but once again, the FSA should have been clearer with the guidelines in this area, from the on set, not giving these opportunists the opportunity in the first place! The FSA are the regulators, they should be crystal clear in their regulation!

The Treasury Select Committee has called the Nationwide, Yorkshire & Britannia Building Societies to give evidence on “their part” in the current Banking crisis. The 3 Chief Execs are all to be questioned this week. Issues to be covered are the “uber-building societies” on customer service, competition & their future resilience. I don’t think the government have any thing left to prop them & the banks up with, in the future.

If we, as a sophisticated modern economy, are going to move forward and combat these events in the future, people need to become responsible for not just their previous actions, but their future part in the Banking Sector. I think the IFAs will gain from the uncertainty surrounding the Building Society & Banking Sectors going forward. Clients are becoming more sophisticated in their Financial Planning, partly through necessity, and I think there will be a shift back to traditional IFAs who give Financial Planning Advice not sell products!

A bit of good news for Legal & General, they announced that their UK and Worldwide business sales increased by 3% from December 2007 to December 2008! Sales purely in the UK rose from £1.321 Billion to £1.367 Billion, over this period.

Underneath these figures, a story is told. Apparently Protection sales were down last year, mainly due to the Mortgage slump, but due to the purchase of Suffolk Life, early in 2008, L&G Sipp business soared, as Suffolk Life are a Sipp specialist. It was also announced that they look quite robust going forward into 2009! I think their major challenge in the future will be one of distribution, with Northern Rock & Bradford & Bingley diminishing, I think L&G will look towards the IFA sector & their direct network whilst building up their partnerships again!

I couldn’t finish my blog, this week, without mentioning about the world of Mergers & Acquisitions. Resolution Limited, an organisation set up in 2008 as a “buy-out” firm, has posted a loss of £700,000 in its first trading quarter. On the FTSE, and having raised £660,000 from Investors, they are still eyeing new acquisitions in the IFA market this year.

If I was a betting man, which I am, I’d be surprised if there’s a single week, in the next 6 months when I don’t read or hear some form of article or news re- another acquisition, another buy-out or another merger. The arguments are very strong for acquisitions currently; not least economies of scale, but a larger firm that is “cash covered” can expand during a down turn such as Towergate, and be a true giant when the good times return. They are buying viable businesses with track records! Watch out Towergate, Resolution will be catching up!

Super Banks, Super IFAs, now…Super Mutuals!

The PFS-Personal Finance Society, are helping Advisers revise for the CII Diploma Exams, through a series of study sessions. Aegon Scottish Equitable are behind it all as the sponsor. Apparently the percentage of members that have completed the Diploma exams has increased by 30%. These study groups will be held in Leeds, Bristol & Birmingham in March so get yourselves booked in.

IFAs, in my opinion, are given a lot of support on the technical side, with these initiatives,& it could be a great time for Aegon Scott Eq to promote their Life, Investment & Protection products (I’m so sceptical). More importantly, it could be a great forum for IFAs to discuss their experiences during the recession, and share ideas of how different firms are dealing with issues! A problem halved etc….

A bit of a sad story really, the FSA has stated that by the end of Q3 2008, 340,000 Mortgages were in arrears. It was discovered that lending peaked in Q3, 2007, but declining dramatically since then.

This, for me, is the key to recovery, if the Mortgage sector was to come back, construction would follow. But, this is looking further away than expected, and despite billions of pounds from the Government, the banks aren’t even lending to each other, and hence, have been accused of taking legal action straight away, on people who briefly slip into arrears! I think, if efforts again, to get the banks lending, not just in the mortgage market, but to businesses and individuals alike, we will be at risk of a “second depression”.

The recent trend of, what I would term “uber companies” has continued this week, with the rumours of CFS-Co-operative Financial Services & Britannia Building Society, coming to fruition! The merger between the two is likely to create a “super mutual”. This new giant, will compete with government and shareholder owned banking organisations. Through, Economies of Scale, an overall calculated saving of this combined organisation of £60,000,000 will be passed onto customers, through “competitive rates and improved customer service”. They are likely to create a single brand, but this will take up to 3 years, and still has to be passed by the shareholders later this ye

This is a constant trend! I’m surprised, if I don’t read about some type of merger or acquisition in either, the IFA, Bank or Building Society sectors each week. I know that Britannia’s x-tie Axa have moved onto distributing its products through National Australia Group, NAG amongst others. I suppose it’s nice to have a chair to sit on when the music stops.

Onto the Macro picture, last week, the Office for National Statistics displayed that the Uk Economy shrunk by 1.5% in the final quarter of 2008, having an immediate impact on the FTSE, pushing it beneath 4,000 points, to 3,968 by mid-morning on Friday. RBS, Lloyds & Barclays lead the retreat, falling between 3-13% by 10.30am in the morning.

This follows on from what I saying earlier, it’s a vicious circle, the banks are being over-cautious about their lending, which adds to lack of confidence in the whole sector. All it needs is one big snippet of news, and the bank’s share price suffers exponentially. Someone, somewhere has got to start lending to someone, and try and break this cycle. The alternative is, the Government nationalising the whole banking sector, building on their stakes in Northern Rock, B&B, & 70% of RBS!

I tried to pick a positive note to end with, but I don’t think that the grey, rainy weather is the only grim picture in the UK this week. So, I’m afraid it’s negative again! The National Association of Pensions Funds stated that 52% of defined benefit Pension Schemes, (that are still taking on new members), could shut down due to the Recession and Banking crisis. Latest surveys by the NAPF, suggest that around 1,000 Pension Schemes are in trouble.

Basically, employers, in such a down turn will look at areas where they can make savings & 60th, 80th & 30th (if they still exist) are good place to start in their eyes. This has been happening for over a decade now, and the days of employers paying out 40/60th of people’s final salary at retirement are long gone. Oh to work in the Public Sector!

Towergate moves to double figures in its acquisitions!

Legal & General, according to Money Marketing, have announced a re-structure of its IFA Wealth support team, which will result in the team being reduced by nearly a third. The team which comprises of both technical support, but also IFA Business Development Managers, will lose approx 35 people out of 121. A spokesman from L&G stated that this re-structure reflects market changes.

I think this won’t be the only issue with L&G; they have a professional, driven sales force, in my opinion, but will be running out of branch networks for them to operate out of, starting with Northern Rock, and now with Bradford & Bingley. They still have distribution channels through Alliance & Leicester, but this will be under threat with the Abbey Santander situation. Maybe driving their product range to a smaller, but more streamlined IFA market maybe a credible option, but not with a reduced sales force. However, I do understand that Life Offices have to make “jam today” also, and there are less IFAs out there, due to RDR etc, for Life Office BDM’s to sell to. An impossible quandary for some!

Talking of Santander earlier, their Asset Management arm has launched a series of growth & income portfolios, as part of a new promotion of Investment fund with more “mass market” appeal! The logic is that, with these products available through Abbey branches, with no upfront costs, these may appeal to a changing Bancassurance market, who are more concerned with Income returns, than before!

I’m fascinated to see how the Abbey Santander group, accommodate, merge & combine, all their equally distinctive brands, with Bradford & Bingley & Alliance & Leicester being part of the collective. I’m been wracking my brains to come up with an acronym that might fit. Do email in ideas…..maybe….ABAS Banking Group. Don’t worry, I will patent it!

A big promotion for Bryan Innes at Towry Law. They’ve promoted him to Senior Client Partner, which is reserved only for the very pinnacle of their Wealth team. Apparently, he’s been instrumental in building relationships with the Oil and Gas industry in Scotland. Well done Mr Innes!

It’s good to hear positive stories in the IFA market, and I think, National and Regional IFAs should reward those individual that don’t sit on their hands and moan about the “credit crunch”, but those who build relationships, even in bad times, and are well placed when the good times come back.

The FSA have announced that Trainee IFAs will be allowed to give advice to clients, whilst still studying for QCA level 4 Qualification, if supervised by their manager. Basically, these new benchmark Qualifications for Trainees to take before they are ready to advise across the board, will be a huge Investment for IFAs before they see any economic return from the new Industry entrant.

I believe this is a very practical approach from the FSA, realising that IFAs have to reach for new goals in terms of TCF, RDR, new qualifications, but in the meantime, they have be economically viable, and keep turnover ticking along, in order to survive.

Finally, Towergate, made the headlines in 2008, with their aggressive growth plan, but don’t think they’ve taken a rest in 2009. They’ve recently announced their tenth acquisition with its takeover of IFA & GI Brokerage Smith Blamires. This will bring their total adviser number to 100 & Financial Chief Exec, Ian Darby stated that they will continue to add high quality businesses to their group, but that they can offer IT support & a leading brand to these acquisitions!

To finish on, these Mergers & Acquisitions are a result of not just the down-turn or recession. I think the industry itself, is changing to a more streamlined, fee based approach with a higher standard of education for IFAs, and smaller firms have realised that aligning themselves with the right type of larger firm will give them a more prosperous future.

The Post Office as a State Bank?

So, into the second week of 2009, a busy week for the government with reports of “money printing” from treasury sources, and interest rates and libor rates down to record lows. Personally, when we talk about expanding the money supply, the government are more likely to do this through adding liquidity with government backed iou’s to kick start the banking sector and get them lending to each other, not old fashion money printing, I hope!

I think this is the key, because if banks aren’t lending to each other or the public, it doesn’t matter what rates are set. Later we’ll have a look at a report of a possible state bank candidate.

John Charcol Directors have been in the Industry news this week, as Money Marketing revealed that in 2008, they were forced, through pure survival to place £2.1 million into their firm, along with having to underwrite £1.3 million rights issue, along with a juicy £1.2 million debenture to make sure they met FSA capital standards for last year. Three directors, Jon Moulton, Charles Wishart & John Garfield had put together £1.5million to pump into the organisation in 2007!

All these re-financing issues coupled with Charcol, re-tying themselves to L&G on the product side for Life & Protections, should place them in a strong position when the good times come roaring back, hopefully later this year. Maybe a chance for them to repay all the Investment in themselves. They obviously have faith in how they go about servicing their clients. I’ve been in F/S Recruitment for nearly a decade now, and I remember the glory years of John Charcol, where they held a big portion of the market, maybe those days will return! Good luck to them!

So what have the IFAs been up to in this 2nd week of 2009? Well, 2plan, National IFA Brokerage, have appointed Julie Darlington and Standard Life’s Paul Mcnamara onto its board of Directors. Their Management Chief Exec officer, Chris Smallwood stated that these appointments are part of their strategy to build for the future, and have a specialist in each area at the top of their organisation : Julie from a compliance, supervisory and paraplanning background, and Paul’s overall extensive industry knowledge and actuarial background are both bringing something to the board.

Personally, one of the positive things that medium sized and National IFAs are doing is to think long and hard about who the right calibre of people are going to be to get them through the bad times, but also be there to take advantage of the good times!

Still in IFA land, SimplyBiz advisers through its “New Model Business Academy” are, according to a survey of their members, are looking to sit over 2,400 CII exams in 2009. What about the rain forests, although, it’s all automated these days!

Joking aside, this is very impressive, as on top of this stat, nearly a quarter of Simplybiz members are at least Diploma level and /or above, of which 250 of these members are qualified to Chartered or Advanced Diploma level. I think IFAs, generally, should pat themselves on the back. Since writing this blog each week, I’ve found that on average, they’ve reacted to the recession, by becoming more pro-active, giving better quality of advice, offering a wider range of Investment and F/S products, and finally, they’ve educated themselves to higher levels, and many will hit and exceed FSA targets for 2010 and beyond. Well played to them!

Interesting article in Money Marketing, Treasury Committee MP, John McFall, has made calls on the Government to think about making the Post Office into a state bank to help kick-start the Economy and deliver lending targets! Furthermore, Mr McFall, stated that most Banks naturally are being too cautious with lending to different parts of the Economy, but that this will limit the revival, and cause a second depression! The Post Office, he believes could be a perfect vehicle to turn into a National Bank to offer a more aggressive lending policy!

It’s a “vicious circle” in these times, the Banks, were decimated in 2008, so have gone back to a more cautious lending and mortgage strategy, despite the government lowering interest rates to 1.5%, the lowest in recent History, and rumours of a expansion of the “liquidity” supply to the banking system. This cautious lending strategy filters back into the economy with individuals and businesses not being able to get access to credit to expand through the down turn, and hence a second “credit crunch” occurs. At least, with a state bank, they would have a different lending agenda, and hopefully, as people came out of the recession and the good times came back, they wouldn’t renege on their loans and the recovery is aided. Food for thought!

IFA’s must increase marketing to survive 2009!

Happy New Year everyone! So what happened in the last week of 2008, moving into 2009? According to Money Marketing, the Halifax has urged Brits to fund there Pension schemes properly, or even start paying into a Pension of some sort, as a New Year resolution! Apparently, their research suggests that over half the population of the UK, don’t pay into a Pension at all, and that around 70% of people surveyed overestimate the value of state pension provision.

I think this is a crucial issue for us, getting more vital year on year. Firstly, were generally living longer, and hence the working population in relation to the retired populous is getting smaller, and hence personal retirement provision is key! I think IFAs, Bank based Financial Planners, and such like have been armed with this survey and others to go out there and preach the good word of Personal responsibility for retirement. It also makes me personally want to ring my IFA and update my Financial Planning!

So what’s been happening in Regulation Land? The FSA are hosting a “treating customers fairly” seminar in Norwich on the Jan 21st, for small IFAs and Compliance people, to focus on preparation for TCF assessments later in the year! These are designed to aid the small IFA firm to consider the needs of the client at each stage of the sales process and effectively getting them to take ownership of this process!

If the standards of advice in Financial Services is going to be top notch in 2009, firms, IFAs, regional practices need to know exactly what is to be expected of them by the regulator, and if these types of seminars will help this process, then I think it’s a step in the right direction.

Interesting article from moneymarketing.com, apparently IFA Life stated that for IFAs to survive and prosper in 2009, their marketing projects and activities will be crucial! IFA Life founder, Philip Calvert stated that some IFAs are suffering from complacency and relying on Income/Renewal streams, and need to be more forward thinking in terms of marketing to get new business or income on board!

Couldn’t agree more, in researching the IFA market place to write this blog, each week, I’m learning that the real IFA winners of 2009, will not simply rely on existing Income streams, but be pro-active, through whatever mediums, marketing shots, seminars & presentations to clients and professional introducers alike, as business volumes have fallen and if you stand still, you’ll lose!

Better news for IFAs in the New Year, David Golder, MD of Bankhall’s IFA Services, has stated that clients who lack trust in Financial Institutions, such as Banks/Building Societies, may push them towards seeking advice from IFAs!

Personally, I believe, weve seen a year which is unpresidented in the UK Financial System, names like HBOS, RBS, Bradford & Bingley,not to mention the Investment Banks, all in trouble at some stage in year, to the point of Nationalisation (or part there of). Couple this with people becoming more sophisticated in their Financial Planning or more informed, I think IFAs, if they are ore pro-active in winning new business, can take advantage of this shift in emphasis! Good Luck all you IFAs in 2009!

Finally, onto the mortgage market, according to the Land Registry data, the stats show that house prices dropped 12.2% in November 08, compared with November 07, with the average house price being £161,883 (quite near to 2006 levels)!

Obviously, weve seen prices fall in the Mortgage market place, but Im confident that by the 2nd quarter of 2009, due to Libor rates being extremely low, following record Base Rate cuts in 08, more extensive mortgage products will return to market, and that pro-active Mortgage Brokers and Mortgage IFAs, will take advantage of rising business volumes by offering a wider range of Mortgage and re-mortgage vehicles!

More IFAs reach certified status…

Positive development to begin with-according to Money Marketing, the Institute of Financial Planning has announced that 900 Advisers have actually achieved the Certified Financial Planning License, with these numbers looking to increase to 1,000 in quarter 1 of 2009, currently 20% up on 2007.

I think this shows that there are many Financial Planners in the UK that actually want to develop themselves to be able to give high quality advice, and are responding well to the “sea change” in Financial Services. We forget that for every Financial Adviser who resists advancing themselves technically through whatever route, Certified, Chartered, AFPC etc…., there are numerous individuals who want to self-development swiftly through these outlets!

Over to Life Office World……Standard Life have announced that it is to cut 37 jobs in their marketing team in order to “refocus” their marketing strategy going forward, through redundancies by Spring of 2009.

This trend, in my opinion, is continuing, until F/S Life Offices see business volumes recover, as the downturn bottoms out and comes back up the other way. I think Financial Services was affected early by the downturn so logically will recover earlier: 2010, quarter 1, will see fantastic volumes of Life, Pension and Investment products (you’ve heard it here first)!

Onto the Networks, Sesame is poised to acquire Premier Network Group’s final remaining 37 appointed representatives. This move was confirmed by Director Paul Fisher of PNG, after a meeting in Derby, last week.

All sectors of Financial Services, are either streamlining, announcing redundancies, being “swallowed up” by bigger firms, banks or networks, for security in these dark times! I wonder how many absolute Networks will be left after 2009.

Also, on Networks, Prestbury has been hit with a winding up order, last week, as it’s been unable to pay creditors, mainly due to the fact that its members have been unable to pay
themselves. This problem has been intensified, since it agreed to transfer some of its members/ARs across to Personal Touch Financial Services, as some went to other Networks, or some didn’t meet Personal Touch’s criteria!

There are certainly, ripple effects, at work within the IFA/FS market at the moment, Prestbury are owed £360,000 by their members and hence have a cash flow problem to pay their creditors, and hence “wind up” orders are proposed! With Business Volumes falling for ARs and Network Members, coupled with P.I costs, and enhanced time needed to meet RDR and Capital Adequacy, they them struggle to actually pay their levy to their Network or holding company!

Banks and IFAs continue to grow through aquisition…

The Parliamentary Ombudsman, Anne Abraham, has been supported by the MPs on the Public Administration Committee to compensate clients of Equitable Life who have been “miss-sold” Pension and other Product in the past, and to look into the way these investigations are conducted in the future.

My thoughts are, with Fee-based IFA Practices, growing the future, and IFAs effectively charging for their time, and not the sale of products, “miss-selling” or the hint of such things, will reduce greatly, moving forward. This development has been amongst controversy, that the Government have delayed making a decision on victims of Equitable Life “miss-selling” until after Christmas.

More news on the IFA Acquisition trail, as Towergate has acquired Russell Plaice & Partners…… and RP& P, an IFA Practice based in Lincolnshire will be re-branded as Towergate Russell Plaice. Towergate are showing an extremely strong growth plan in a down turn, with this being the 9th acquisition in 2008, posting a formidable total of Advisers to 95 across the entire group! Ian Darby, Chief Exec of Towergate, said this was an excellent addition to their group, as RP & P, are a successful practice with HNW clients……

Each week, I come across the exact same story, the Banks aren’t the only animals taking smaller ones under their wing, in the IFA market, and this has never been so prevalent. I think the reasons are numerous ; the effects of RDR, and IFAs deciding to leave the industry, and smaller firms not being able to financially survive in the Market place, or even, small, but successful Practices, like above, securing their future by linking up with a larger firm that will support them to further success.

Acquisition isn’t just limited to firms, as James Hay have proved…They have added Cazenove UK absolute target fund into their wrap platform, bringing their total fund choice to 1,373 through 59 different providers. This addition to James Hay’s wrap proposition, offers a neutral stance on short and long positions, and doesn’t resemble the market, and Chris Smeaton, Head of Funds, stated that they can offer a wide range of Investors, a wide variety of Fund and Investment choices.

Again, I’ve seen this more and more, “cash is king!” is a true saying, at the moment, and IFAs are offering better choice, better quality of advice in general & a better service than ever before, to attract a portion of that liquidity. Furthermore, I think, IFA clients are in a strong position as to where and, with whom they invest their monies! Never, has the IFA Market offered better choice to potential clients, and ones that have been in situe for years.

Back to the Banking Market, as anticipated by some, Santander, are to axe around 1,900 staff in 2009, mainly from back-office roles within Alliance & Leicester, Bradford & Bingley & Abbey Savings Arms, as it looks to streamline and combine & integrate the various Products into one brand. Maybe, 6 months behind their rival “super-bank”, HBOS shareholders have voted yes to the merger with Lloyds TSB to start in 2009.

So what implications does all this have for Financial Adviser & Wealth Management Roles within the Uber Banks in 2009? One word, I think “uncertainty”, certainly in a recession, it logical to think that there is less Investment and Financial Planning Business within the Bank Balances, and as these two giants are looking to amalgamate their products, redundancies in Financial Planning roles, I think, is a distinct possibility….

IFA Market Place absorbs RDR & Capital Adequacy Standards…

Interesting development, Standard Life have bought their way into a minority shareholding of RSM Bentley Jennison FM Group to aid their distribution of their Life, Financial Planning & Wealth Management. Tony Stockdale, Managing Partner of RSM BJ, said it was a wonderful tie-up and allows them to accelerate their growth plan.

In my opinion, this type of tie-up will become more and more common, especially in these uncertain times. I think Life Offices, and Banks have to “spider” their distribution chains, as these Wealth Management Firms have the reputation for quality advice that can add credibility to them.

The FSA are taking action to improve the quality of advice given to Pension clients, switching into SIPP and Personal Pensions, as they discovered around 80 cases of miss-selling, whilst reviewing 30 Firms. Furthermore, the FSA will be writing to around 4,500 firms to set down minimum standards of advice for Pension transfers, followed up with assessments in Q3 of 09 & further action against non-compliant firms.

I think this is important, and that clients should be looked after re-the quality of advice given, but it would be refreshing to read an article about the FSA that shows them trying to help their members grow their IFA businesses and secure IFA jobs for the future, through maybe working with members in order to develop professional connections such as Accountants & Solicitors etc…., here’s hoping aye!

More FSA News (I suppose they are the regulators), apparently several members have expressed concerns over the merger between the Cheshire & Nationwide Building Societies, in terms of their combined deposits exceeding the max compensation amount through the FSCS.

The FSA will be looking into this, but I think these mergers are simply “par for the course”, and dotting the I’s and crossing the T’s, are secondary to the main protagonists, as their main priority is survival.

A bit of a sad story, the Capital Adequacy Standards of the RDR, are already impacting into small IFAs across the country, i.e.-doubling the minimum cash reserves of IFAs from £10,000 to £20,000, and pushing some out of the industry. One x-sole trader mentioned, Tony Catt suggested that these reserve requirements have already made him transfer to a network as an Appointed Rep, and that these requirement, although being fair, wasn’t sure whether they were actually necessary, and that this would lead to the FSA chasing round 20 huge IFAs, rather than 5,000 small firms.

What does all this mean for IFA Jobs going forward? Maybe some members won’t join networks & simply drift out of the industry due to RDR. I fear, that every “cowboy” IFA, RDR pushes out of F/S, there will be several honest, decent, IFAs that will leave the industry as well.

On Thursday, the Monetary Policy Committee reduced base rate again down to a new low since 1951, and with LIBOR plummeting also, there is very strong pressure on the Banks/Building Societies to pass this onto their members through reduced Mortgage rates, to kick start the overall Economy.

To me, there’s a trade-off here, and some feel that prudent savers are paying the tab for excessive borrowers, but what is the alternative? The fact that if the mortgage market gets going again, other industries will follow such as construction, etc…., its vital that this process has to work, but I do sympathise with IFAs who have to explain to their clients that long-term Investments are what the term suggests-Long-term, and their will be a bit of turbulence along the way, but that the clients monies will still reach their destination!

The Retail Distribution Review (RDR)

….will impact into the IFA Sector, IFA Jobs & AFPC Qualifications, it’s predicted by many Financial Services gurus. The consequences for IFAs has really been felt recently, as November turns to December, and 2009 rolls in. Gillian Cardy, from Professional Partnerships Ltd, has predicted that many IFAs may leave F/S altogether because of the minimum qualification requirements brought in by RDR, & only 5,000 of a believed 27,000 IFAs have AFPC Qualifications, and there is a big gap to bridge for many IFAs to get unto speed in 2009. A further prediction by Gillian Hardy suggests that in 10 yrs time, minimum standards for IFAs may rise further to Degree Standard. I think there’s a real “sea change” within the IFA Market affecting IFA Jobs and Financial Planning roles moving forward. Perhaps by 2020, they’ll be a small number of pseudo-intellectual fee-based IFAs left, in a very streamlined, almost Solicitor type Industry, where Advisers charge for their time not the products they sell.

 

Personal Touch has launched, according to the Financial Adviser, a full Paraplanning Service for its members, (which I think is a fantastic idea), as it will free up their members to concentrate on Business Development etc, free in the knowledge, that their back office is covered through well-qualified, compliant Paraplanners. My view is there’s less business out there, so lets make the business that does go through, as “squeaky clean” as possible. I don’t think enough IFAs see the relevance and benefits of sound Paraplanning support, good on Personal Touch and other IFAs that notice the impact of this, especially in these times! In short, Paraplanning Jobs should precede IFA expansion, not the other way round.

 

In the Banking Sector, despite a little bit of “argy-bargy”, the shareholders of Lloyds (well 95.98% of them) voted in favour of Lloyds TSB taking over HBOS. I don’t think the mergers and acquisitions in the Banking Sector will detract too much from IFA jobs and careers. I think that in the future, there will be a lot of through traffic of clients and their financial planning through these giant Bancassurers, but as people become ever more sophisticated in terms of advice, fee-based IFA Practices will be well placed to add to their retained income.

 

Maybe on a smaller scale, lets not forget, there have been many mergers and acquisitions in the IFA market as well. Buckles, in North Wales, according to Money Marketing, have acquired Highgrove Investments, bringing their clients in the North Wales/Cheshire area to 25,000, and this adds to their strategy of acquiring client bases of retiring IFAs, and also a Graduate Scheme for their IFAs who are trained up and can ease into a full client base from day 1. Nigel Speirs, the Chief Exec, of Buckles says that these graduate IFAs will inherit a client base of around 400 private individuals. More and more regional IFA firms are growing by acquisition in this way.

 

So what effects has the pre-budget report of Mr Darling had this week? Well the VAT reduction, may, its been suggested, lead to charges for fee-based advisers, tax planners and private-client brokers being reduced on a temporary basis, according to the Financial Adviser. Furthermore, the Investment Management Association, said that the Pre-Budget, could make the UK in general, more competitive as a home for certain Investment Funds (Authorised ones of course!). Surely not, some good news for IFAs, and also lets not forget, the VAT drop will reduce payments to Recruiters for placements. More good news!

 

Finally, could lenders be given the “green light” to further pass on the Base Rate cut to consumers, as three month LIBOR rate (very important for the Mortgage Market) fell to 3.91%. Who knows, could we have turned the corner? I think by 1^st/2^nd quarters of 2009, we’ll see a recovery in the volumes of activity in the Mortgage Market.

 

In summary then, there are rays of sunshine out there, if IFAs push on, keep on improving themselves, get those vital qualifications out of the way, always keep their eyes peeled for acquisitions of decent client bases from retiring IFAs, boost their Paraplanning support, they’ll inherit the earth when the good times come back! Good news for IFA jobs in the future, in practices that can meet the challenges of RDR, & TCF, bring on December……….