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……….

IFA Jobs…

…are all going to be effected moving forward, due to various factors, not least, due to RDR, TCF, but also due to mergers and acquisitions of Insurers, Life Offices, Bancassurers & the rising cost of PI Cover, due to exchange rate fluctuations.

 

The FSA are the one’s in the spotlight this week, their being scrutinised by the Treasury Select Committee over their role in implementing the Retail Distribution Review (RDR), the Treating Customers Fairly Initiative and amongst over things, regulation of the Retail Banking Sector, a very crucial issue, especially in this day and age. I’m going to be very interested in their findings, as these factors have directly effected the way that IFA’s have carried out their roles, the perception of Bancassurance Financial Advisers and IFA Jobs themselves within Financial Services.

 

Apparently, according to Just Retirement Solutions and their research, nearly a quarter of pensioners retiring, retire in debt. Many have to, due to depleting income and rising fuel costs, either live on the breadline, or have to work to supplement their Pension income. I’d of thought they would need advice from firms that specialise in Equity Release and other methods to supplement their retirement planning. I think the one good thing about current times, is that people are realising that they really need Financial Planning & Independent Financial Advice well beyond retirement, and when we do move through RDR,TCF etc.. to wholly Fee Based IFA Practices, a new era will dawn for IFA jobs and careers, because people need decent, prudent advice all through their lives.

 

Analysts, Keefe Bruyette & Wood have forecasted that the Prudential will become the biggest insurer in the next five years. This giant Life Office, according to these analysts mentioned above, are in a great position to acquire AIG’s Asian business at a cheap price and overtake over Life Offices/Insurers such as Axa, Allianz, Swiss Re etc…, and reach top spot by the 2010’s. Great forecast, and if the Pru have a good IFAs, Brokers, and Bancassurer Financial Advisers to sell their products through, this might add to their success!

 

Zurich Financial Services, have completed its acquisition of NASTA Insurance Company for a modest £137 million (a mere snip!).I think Zurich maybe a rival to the Pru in the previous paragraph, and the Zurich Retail Insurance Group,is now the largest foreign controlled G.I firm, as it operates in an international brand in the Russian market. I stand by my theory about when all the smoke settles, there will be a small number of giant Bancassurers, Life Offices, Insurers and maybe IFA Practices offering fee-based financial advice to customers, they’ll all become Financial Services Oligopolies and this I think will all reduce the amount of IFA jobs out their in Financial Services.

 

Fascinating article in Money Marketing, tating that Professional Indemnity cover may rise for Brokers and people in IFA jobs, as the value of the Pound falls against the Euro, according to PYV. Managing Director, Neil Pointon rightly pointed out that PI cover has risen to 1.5m euros creating a pound equivalent £1.3m, compared to £1.15m 12 months all due to a weaker pound. This is because the pricing of PI Cover is set by a Euro Directive. This is a direct factor for IFA jobs going forward, as the market gets harder, every little penny will count towards the longevity of IFA businesses into the 2010s. This definately needs to be looked into, and I don’t think the FSA should pass the buck on this issue.

 

In short, I think the future is bright into the next decade, as consumers recognise the benefits of prudent, sound advice whether it comes from a regional or national practice, I just hope that professionals in IFA jobs get all the support in terms of PI, RDR etc… to face those new challenges ahead.We wait the coming week with baited breathe!

Mergers, Redundancies and a Bit of Research

Hi guys, me again, so what’s been happening as we trudge through this down-turn from within Financial Services.

Well according to Money Marketing, Leadbay, an organisation that aids IFAs and Mortgage Brokers through the purchase of client leads, stated that Advisers, IFAs and Brokers are buying up “first-time buyer” leads cheap, then sitting on them until the good times come back when those clients are going to be convertible as the Mortgage Market comes back again! Nice plan, lets hope it does actually come back, but signs are getting better after the Base Rate Record cut, last week. Furthermore, the logic is that as these Adviser simply keep in contact with these clients, even though business is being transacted, the client is more likely to feel loyal and grateful back and when the good times come back, they will turn to the adviser for more than just a mortgage and use them for other issues, again, nice plan.

Fairly interesting story here, according to Canada Life, their research has shown that 3 in 4 consumers believe they wouldn’t be able to maintain their current lifestyles for 12 months in the event of being unable to work, or not able to claim benefits ( now after the Welfare Reform), and their pushing their brokers and Appointed Reps to encourage their clients to take out Protection policies, its certainly one of my short-comings, amongst other things!

I wish I was involved in this placement, Standard Life have appointed Sarah Mann as a Senior Portfolio Manager on their Wealth team in London, to run Management of Client Portfolios and Relationships! Life Offices are still expanding their Wealth Management Arms, which is more important in a down turn as they want to make sure they can insulate themselves through maintaining funds under management. But, lets not forget the Prvate Client Managers who go out their and pro-actively germinate that Business in the first place, Life Offices still need to recruit those “go-getters” that make sure the coal is still driving the train forward!

Friends Provident is thought to be slashing jobs, through redundancies as it merges 2 offices, this will mainly affect IT and customer services, and will vacate its Manchester office by Dec 31st ,09! This is becoming a common occurence , but I think that Financial Services and Recruitment have pre-ceeded this “recession”, and that the good times will also pre-ceed the up-turn, just hang in their guys, and ring a good Recruiter to secure some top IFAs, Mortgage Brokers, Financial Advisers becaue the good times will come rushing back!

One worrying stat that I noticed this weekend, was that £779m is currently owed on CCJ’s in the third quarter of 2008, and increase of £100m from the same period last yr! This is according to Callcredit, and this figure is expected to rise as we go further  into the “recession”, no wonder people aren’t worried about their Protection and Financial Planning needs with IFAs and Life Offices, as they have other priorities.       

More bad news came on Friday morning as RBS announced, despite the £20 bn bail-out for the Govt, they maybe planning to cut 3,000 jobs across its Global Workforce, in order to better survive the down-turn.

Finally, Axa has signed a tie-in with Clydesdale and the Yorkshire Bank to offer Investment/Protection Products. Apparently, Axa will gain from having access to the Banks’ 2.3 Million Clients, and Clydesdale/Yorkshire will retain their team of Senior Financial Planners, who move to a Whole of Market approach, whereas, the 129 Financial Planners will transfer to Axa and sell their “elevate platform”. This has been happening across the board with Life Offices, Banks (Lloyds-HBOS) & IFA Acquisitions also, I think when the sea is stormy, it makes sense to tie several rafts together. I just hope they can attract the right calibre of Senior Financial Planners in 2009, who can sell on a Whole of Market basis! Once again, they need a good Recruiter.

In summary, to get through the down-turn, Life Offices are continuing to either cut jobs in their ancilliary functions, or merge sales forces or distibution channels, or expand their Wealth Management teams.Good strategies, if backed-up with good, solid recruitment of those pro-active, business winners that can drive the engine in the first place.

Banks and Life Offices continue to struggle!

November brings relief with the interest rate record fall, but Banks and Life Offices continue to struggle!

Hi again, so what has the first days of November, brought us in terms of news and developments with Financial Services. Its been a really exciting week with a record reduction of base rate by the Monetary Policy Committee & the Bank of England, on Thursday, taking it to the lowest level since 1955. Great for people on tracker mortgages and about to re-fix, assuming the rate is fully passed onto the customers, not sure where it leaves Independent Financial Advisers trying to sell short term Investments with their clients. Furthermore, with Base Rate at 3% from 4.5%, the onus is on the Banks to adjust their rates accordingly, but with the Libor Rate (the rate that Banks lend to each other at) still being set, and Banks still recovering from toxic debts, writedowns, & previous losses, the effect to consumers wasn’t immediate. Gradually, through the week, they’ve started to reduce their mortgage rate, for instance RBS/Natwest announced they were reducing their rates. Hopefully, this will kick start the mortgage market for the first quarter of 2009, good news for the besieged Independent Mortgage Brokers.

JP Morgan have analysed the consequences of the Interest Rate fall to the UK Economy. Two reservations are worth mentioning, what effect will this have on Sterling and its value against other currencies, and will it further slow the growth of GDP, going forward into 2009. In terms of its effects on Financial Services, as mentioned earlier, IFAs will spend a lot of time to retain Investment Business, but hopefully the Mortgage Market will bounce back and Life Offices and Banks may need to get recruitment of Mortgage Advisers off the ground again!

RBS have announced £200 Million in writedowns and bad debts in the 3rd quarter of 2008, but plans to raise £15 Billion in a new Share Offer, with the Government promising to buy up the remainder that the shareholders don’t buy. Also, Lloyds are looking to raise £17 Billion in a similar way. This is a constant issue, with the Banks trying to gain liquidity for 2009, but what does this mean to Financial Services and Recruitment going forward. A lot of the Banks have announced Recruitment embargo’s recently, and are tightening their belts, but I think they need to put their faith in actually attracting the right type of pro-active people to kick start the branch team, and expand their client base. That’s where we come in at Foundation, he he! In talking about the Banks, the attempted takeover by 2 x-Chief Exec’s at HBOS, failed as the Board and Chairman didn’t think it would offer anything for Shareholders, and that going to put their faith in the Lloyds takeover, and become a “Super-Bank”, fighting crime and rescuing customers on the High Street. I think this could mean redundancies for Financial Advisers, Customer Advisers etc, in 2009, it will be interesting to watch it unfold.

In the IFA market, Aegon who owns Positive Solutions, & Origen, has announced £4,000,000 in losses between both subsidiaries, in the first 9 months of 2008. Otto Thoresen, the UK Chief Exec, said depite the losses, and a challenging market for IFA distribution, Aegon is committed to both brands, and can see their profitability going forward into 2009. IFAs, whether they work for a National or Regional Firm, need to talk to a recruiter that they trust, and confidentially put the feelers to see whats out there rather than registering with these Job Boards, as an experienced recruiter can really pin point the right direction for Advisers to go in.Other life offices are struggling at the moment. Skandia UK, for instance have reported a fall of 18% in their Life Sales in the first 9 months of 2008, as apposed to the same period in 2007. Same old story really, some Life Offices panic and make Financial Advisers redundant, but others actually use headhunters to secure, pro-active, go-getters to get business kick-started again! 

Finally, the Scarborough Building Society is planning to merge with the Skipton Building Society. The main cause of this recent victim of the credit crunch, as that back in 2006, they launched a specialist adverse/self-cert arm, actually bought £300 Million of these Mortgages from GMAC-RFC, and noone really knows what happened to this Portfolio, any guesses! When the good times are back, they’ll be a handful of Giant Uber Banks & Building Societies on the prawl for Business!  

In summary, the Interest Rate fall will, I think kick-start the Mortgage Market in 2009, good news for Mortgage Brokers, but Life Offices, Banks, Building Societies are still feeling the effects of toxic debts and falls in their business volumes. They need to augment their sales and business development team with the right type of individuals to push business forward again. Instead of not recruiting, IFAs, Life Offices, Banks need to recruit smart, and attract top-performers, to get through these uncertain times.

October brings some cold wind in financial services!

Hi chaps/chapesses, my names Ryan, I’m a recruiter in Financial Services, Ive been in this industry, for my sins, about a decade now, and Ive never seen a period of time, like the last 3 months, with such impact amongst, not only the Banking sector, but Life Offices & IFAs. So what’s been happening in the last few weeks, to bring us up to date with this week!

October has brought the “real cold wind” of this downturn, Northern Rock stepped back into the limelight (as if they were ever away), they were attacked by Credit & Housing Charities, for jumping on people who are narrowly into arrears, and taking legal action to repossess without discussing options, basically 0.56% of their whole mortgage book has been re-claimed….. well they do have creditors to pay!

Norwich Union announced that 119 SSAS customers lost their shirts with that stranged named Icelandic Bank-Kaupthings (dodgy spelling), its like a ripple effect with these 6 Icelandic Banks, not only has it affected direct investors, but LEAs, Life Offices, other Banks, and even Governments have been affected, I think these 119 are the tip of the Iceberg, and it may take months to unravel exactly where the story ends…..

Money Marketing reported one of the Industry gurus, Peter Hargreaves of Hargreaves Landsdown, stated that the downturn could off been limited if rates had been kept more prudently, and lending criteria had been stricter, in the past! I think he should have been in charge of things at the start!

Despite Mr Brown, Darling et el with their 37 Billion Pound stick of dynamite to blast through the damn of the Credit Crunch, unemployment reached the highest level in 17 years, earlier this month, with it being projected to 2.1/2.2 million by the end of 2008, bring on Christmas eh!

Week before last, Sterling fell to 5 year low against the $, to $1.62, triggered by Mr Brown and Mr King announcement that we are infact slipping into recession, & analysts have suggested a trade-off between shoring up Sterling against stimulation of the mortgage market, I know which one, 1,000’s of re-mortgage customers would choose!

Chris Smallwood, MD of 2 Plan Wealth Management, says the FSA should have stricter controls of IFAs, Clients that move between companies and Networks in Financial Services, according to Money Marketing.com, he’s reported of saying that client’s needs should come first in these situations, not commissions, renewals etc…

Matrix Data Solutions have some great ideas, an online site for IFAs to register on, for clients to search through, and get details on their services, and where theyre based etc…, and they even have related company site that’s more of a social network for IFAs, you guys have to stick together, check out the site, if you’ve not already. www.mylocaladviser.co.uk & the social network is IFA Life - www.ifalife.com.

So whats happened last week to bring us up to date to the beginning of November…. Competent Adviser has re-launched an upgraded compliance website to aid firms assess the competencies of staff & support compliance & developments going forward. A huge issue, as firms need to make sure their flawless especially in this day and age, when business levels have fallen.

House Prices fell by 14.6% in Oct 08, as apposed to Oct 07, basically the average house price is £158,872, which according to Chief Economist at Nationwide Building Society, Fionnuala Earley, is still £30,000 more than 5 years ago, and Nationwide have stated that sellers are reluctant to sell at a loss so stay out of the market, which keeps market volumes low, but with the UK Economy going into “recession”, the Govt is more likely to reduce Interest Rates which may stimulate the mortgage market going forward! Fingers crossed!

Standard Life UK revealed that volumes have fallen in their Life and Pension sales by around 14%, from 07. Furthermore, assets under management have fallen by 14% in the first 9 months of this year, a challenging time ahead for Standard Life, but join the cue!

I wish I was the recruiter for this piece of Business, James Hay revealed that Shaun Sandiford left them, apparently to go to Ascentric (a WRAP rival of theirs), he was their Head of Key Accounts at James Hay. The Ascentric move has not been 100% confirmed yet, as hes probably awaiting start dates, who knows, I just hope they gave him a good leaving bash!

London Scottish Bank has announced that with effect of June 09, they will be sold, mainly because they were 12 million short of their Regulatory Capital Levels, and have debts of £238 Million…. Further details await….and in contrast, Lloyds TSB have announced their Super-Bank Executive Committee with Victor Blank at its head, assuming the shareholders pass the merger! Oligopoly, here we come…

Finnally, the FSA last Thursday, released a Consultation Paper for 09/10 to ensure firms/IFAs etc that are either newly created organisations, or those who are trying to extend their permissions to sell certain f/s products or to provide new services, that these don’t pay large fees in their 2^nd yr, or large levies……IFA firms are having a bad time already, they don’t need to be kicked while theyre down!

In summary, guys, Life Offices, Banks such as Standard Life & London Scottish are seeing volumes fall and stormy times ahead, more and more brokers are being fined by the FSA week in week out, as desperation sets in, and everyone is praying for reduced Interest Rates and a light at the end of the tunnel in 2009. I just feel that IFAs need to use every medium, every service at their disposal to insulate themselves from the dark times ahead….More news next week!