I am regularly asked by friends what they should do as they approach the end of their fixed-rate mortgage.

As many of you know, roughly a third of people rent, a third own outright and a third have mortgages. Of these, 1.4 million fixed-term mortgages are set to end this year.

Mortgage payments are forecast to rise substantially. For example, an increase from 2% to 6% on a 25-year capital and repayment mortgage of £100,000 means a rise in monthly payments from £424 to £644.

On top of the mortgage (and rent) payment hardship, prime minister Rishi Sunak has hinted he will ignore recommendations for public sector pay rises, saying “workers need to recognise the economic context we are in.”

Food inflation running at 18% only adds to this profound cost-of-living crisis which will change society and force people to make hard financial decisions.

For years, my IFA firm dealt with the financial enquiries sent to the Daily Mirror

Against this difficult backdrop, I am pleased around 85% of UK mortgage lenders have recently agreed to a new government charter to support those facing rising mortgage costs.

Borrowers may contact their lender for help, without impacting their credit file. The charter also enables those who are up to date with payments to switch to a new mortgage when their fixed term ends without a new affordability check.

For those in great difficulty, there will be no evictions less than a year from the first missed mortgage payment except for under “exceptional circumstances”. Further definition will be in the final Financial Conduct Authority rules.

Financial advisers have a long history of providing pro bono work to the public. For years, my IFA firm dealt with the financial enquiries sent to the Daily Mirror. Most required looking at expenditure against income to reduce spending or securing a lesser debt interest rate away from expensive mortgages or credit cards.

There are millions of people who think they have nowhere to turn aside from online or the phone for advice

Would I offer this service again? Yes, I would. In my view, this is a perfect learning ground for trainee advisers in dealing with real people; strangers with financial needs. Plus, I know what we provided resulted in good financial outcomes for many hundreds of people.

Today’s world revolves around digital solutions for debt, credit and balancing the books. For financial advice, I believe there should be at least one face-to-face meeting. This helps to build trust between the adviser and client, forming a long-term relationship.

It is so sad that there are millions of people, especially with increasing bank branch closures, who think they have nowhere to turn aside from online or the phone for advice.

Why should advisers bear the whole cost of helping those in financial trouble?

In these difficult economic times, it is more important than ever for regulated advisers to provide pro bono advice. After all, they are the only advisers that can provide client specific advice across most financial products.

Support from providers and regulators should be made available, though. Why should advisers bear the whole cost of helping those in financial trouble, many who will have a small pension and some savings?

Kim North is managing director at Technology & Technical  

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I don’t need to tell you environmental, social and governance (ESG) investing is on the rise. It is great to see a continued improvement in the industry as we move towards net zero.

We know clients and advisers must be able to trust ESG products and it should be expected they contribute to positive environmental or social outcomes.

However, there are growing concerns firms are making exaggerated, misleading or unsubstantiated claims about their products’ sustainability. On investigation, some claims don’t stand up to closer scrutiny and they are, as such, accused of greenwashing.

Product disclosure for ESG funds is therefore extremely important and all information regarding sustainability and performance must be evidenced and shared with clients in understandable ways through key features documents.

He needed 500 sheets of paper to disclose the plethora of information required

However, Financial Conduct Authority research shows 40% of people do not read any key features documents they are provided with for any financial products at all and many can’t even remember if they ever received one.

We know a paper-based approach to documentation means slower and administration-heavy processes, is environmentally damaging and has a higher risk of inefficiency. So I find it really frustrating the amount of paper we need to produce for clients under current rules.

Fellow adviser and ex-vice president of the Chartered Insurance Institute Robert Reid recently said he needed 500 sheets of paper to disclose the plethora of information required from himself, providers, the Financial Services Compensation Scheme, the Financial Ombudsman Service and so on just for one new client.     

We can now access our medical records through an app, so surely the industry’s default position should be for our disclosure documents to be accessed online through secure portals too, with options for those still wanting or needing paper.

Paper comprises 20% of all waste in the UK, to which financial services is a huge contributor

We use about 12.5 million tons of paper each year in the UK, the equivalent in tree cover to about 21,000 square kilometres – roughly the size of Wales. Paper comprises 20% of all waste here, to which financial services is a huge contributor. 

There are, of course, many companies in the industry offering good online solutions across a wide range of products but not all products are included.

The pensions dashboard was due to be delivered in 2019 (who on earth thought that was possible with the unprecedented data mining it requires from providers?). When it does eventually arrive, it will be a good start to what I believe we should aim for: all financial product valuations and documentation online, not on paper.

40% of people do not read any key features documents they are provided with

This will benefit our planet, the adviser and the client.

People increasingly turn online first to read the news, keep up with friends and family and do their banking. This should be the same for the rest of their financial affairs, especially disclosure documents.

Kim North is managing director at Technology & Technical  

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A column from Institute of Financial Wellbeing founder Chris Budd on Money Marketing recently caught my eye.

Entitled, Targeting luxury misses the point of being an adviser, Budd argues, “It is the pursuit of wealth which is a distraction from the point of life: gaining wellbeing and contentment through helping those less fortunate than you.”

The world would be a wonderful place if we all had enough money, assets and no debt to help those less fortunate. But, sadly, the vast majority of people across the world do not have sufficient wealth to help others outside their families.

In the UK, food inflation is at 16.7% and the cost of gas is almost 130% higher than a year ago.

In November, the Office for Budget Responsibility forecast households’ disposable income would fall by 4.3% in 2022-23, the largest drop since comparable records began in 1956.

People are making every effort to keep their family financially secure and cutting costs is a priority.

The majority of Brits who say financial advice is too expensive are aged 55 and above

Whether you like it or not, advice fees are seen as an expensive luxury.

Indeed, in December, the Financial Conduct Authority reported advisers charge an average of 2.4% of the amount invested initially and 0.8% per annum for ongoing advice (1.9% per annum with underlying product and portfolio charges factored in).

According to My Pension Expert, the majority of Brits who say financial advice is too expensive to consider are aged 55 and above.

This is hugely concerning, as it is those in this at-retirement age bracket that arguably need advice the most.

Facing a plethora of important choices which are then set for the rest of their lives, it is doubly important these people attain truly personal advice, not broad-brush guidance that cannot answer the most vital question of all: which product and which provider?

It is the bedrock of financial planning to include all income in cash flow calculations. The state pension is a vital source of income for the 12.5 million over 65-year-olds.

People with a financial adviser end up with more money than those without

The at-retirement population needs to know the option to allow ‘gaps’ in National Insurance (NI) contributions will end soon. Up to now, people have been able to go back and make payments to fill gaps for any year from 2006-07 onwards. This window will close on 5 April.

I’ve found it comes as a surprise to many clients that they are not entitled to a full state pension due to missing NI payments when, for example, undertaking vocational studies or providing care.

Research from Axa shows people with a financial adviser end up with more money than those without but I see little advertising to attract people of my age – 55-plus – to seek financial advice.

Let’s try harder, as it’s our responsibility to advise people how to find financial security.

Kim North is managing director at Technology & Technical  

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The Treasury last month announced its intention to remove the Packaged Retail and Insurance-based Investment Products (PRIIPs) regulations and consult on a new direction for retail disclosure. The regulator’s discussion paper on the topic is asking for comments by 7 March.

I think the problem starts with suitability. As we know, before product disclosure information is produced there needs to be a sale.

The public needs a non-advising and non-profit equivalent of Hargreaves Lansdown

The FCA’s suitability requirements seek to ensure that, where firms provide investment advice or portfolio management services, they obtain enough information about their clients to be able to act properly for them.

I’ve found suitability to be such a subjective issue. Two identical people could end up with different recommendations depending on how they disclose in the factfinding stage.

I’ve had clients who don’t fully disclose their expenditure as they are embarrassed about their lack of control regarding debt they have racked up or their wardrobe full of designer shoes.

The client can become exhausted from sharing their intimate ‘secrets’ about their lifestyle, aspirations, needs and fears.

They are then put through the many pages of terms of business and details of the Financial Services Compensation Scheme and Financial Ombudsman Service. They are likely to have many questions, too.

Less than 3% of retail investors read regulated pre-contractual fund disclosure documents

This takes hours online or sitting with an adviser, or both.

It is therefore unsurprising to see the FCA states less than 3% of retail investors read regulated pre-contractual fund disclosure documents.

I believe this is a combination of them having reading fatigue and the fact the disclosure documents are so poorly presented it seems as if the fund providers don’t even want them to read the detail.

So, what should investment disclosure look like? The FCA talks about machine-readable data on charges and a single figure, and I believe the public would welcome this with open arms, especially considering 63% of UK consumers have used a price comparison site to research insurance, according to Mintel.

We must be careful not to head into a ‘cheapest is best’ competition

I propose the development of a price and performance comparison site with all onshore funds included, alongside an e-mail contact and quality helpline to ensure the investing public get the information they need at the time they want it.

Hargreaves Lansdown was the first adopter of this model, which propelled it to the FTSE 100. The public now needs a non-advising and non-profit equivalent of that.

That said, we must be careful not to head into a ‘cheapest is best’ competition. It has been proved time and again the cheapest funds are generally not the best performers.

Kim North is managing director of Technology and Technical

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The regulator has announced it is working with The Investing and Saving Alliance and the Association of British Insurers to try and find examples of areas where the difference in advice and guidance is causing problems.

It says the boundary is an issue that has been raised over a number of years.

In failing to meet deadlines in 2021/22 for authorisation applications, money laundering registrations, variation of permission, change in control permissions and bringing in paralegals after facing significant delays in its response to freedom of information requests, the regulator has lots of projects to catch up on. So I do wonder where it will find the time and resources to fully research the distribution of financial products and advice.

Nonetheless, it is clearly an area the public needs support with.

When I talk to people about the difference in guidance and advice, I tell them 98% of advice is guidance but the most important 2% is looking at which product and provider is right.

The cost of that very important 2% is now far too expensive – and moving upwards. This is not the fault of the adviser but of their external costs to trade.

Those who have above average wealth can afford to pay for regulated, personalised advice. But most of the UK population cannot.

According to the Money and Pension Service, 47% of UK adults do not feel confident making decisions about financial products and services. So, what can we do?

First, we need to drop the many titles of distributors when addressing the public, as they just don’t understand them.

I have a lifetime career of providing advice, starting with direct sales, then as an appointed representative, setting up an independent financial advice firm, before joining a financial planning certified and chartered firm. My changing titles do not matter to people. It’s all about which products, investments, tax mitigation, later lifetime advice or planning they ended up with.

To this end, there also needs to be a regulator-supported triage service – both virtually and face to face – for the millions who need advice. The service would guide the individual or company to the most appropriate distributor of products and services after answering a handful of questions. Is it direct sale, a tied adviser or a whole of market adviser?

It’s about time we had true direction from leading research and marketing experts to help show the regulators what they need to do to get millions more confident approaching those that can help them manage their money.

Kim North is managing director at Technology & Technical  

The post Kim North: What’s in a (adviser) name? appeared first on Money Marketing.

From split capital investment trusts to REITs, QROPs to SICAVs.

I’ve had to explain to bright young creatives what the complex products are and how they can be compliantly taken to market in terms of copy and visuals.

My lifetime experience as a financial adviser understanding complex regulator rules has helped me to deliver correctly within the financial promotion rules for consultancy clients and most importantly, the public. 

Designing safe promotions

A memorable meeting held with the Financial Conduct Authority (FCA) predecessor, the Financial Services Authority (FSA) many years ago included being asked about how they could alert the public about high-risk products and investments.

The regulator’s ideas included using red, amber and green surrounding ads and prescribing the size and frequency of ads to all media buyers which would to stop the deep pocketed providers buying larger or more frequent money marketing activity.

 We need to align the trinity of the FCA, FOS and the Financial Services Compensation Scheme (FSCS) so they have the same view

We also discussed how to market high risk investments to include the relevant warnings to be written in the financial promotion rules.  

Moving forward 20 years, this month the FCA issued PS22/10 called “strengthening financial promotion rules for high-risk investments and firms approving financial promotions”.

My thoughts from 20 years ago remain the same.

Firstly, we need to align the trinity of the FCA, FOS and the Financial Services Compensation Scheme (FSCS) so they have the same view on products, investments also the rules, adjudications and guidance need to match.

For example, if a self-invested personal pension (SIPP) client holds a ‘standard’ investment as defined by FCA rules and the investment falls in value, the Financial Ombudsman Service should not be able to rule against the SIPP provider. This occurrence happens regularly to the annoyance of providers and advisers. 

Execution-only (an apt moniker) does not have to consider suitability, and this is where the regulator should give its attention

If a situation arises like the Woodford Investment Management collapse, authorised corporate directors administrators such as Link Fund Solutions in the Woodford case should be forced to act as quickly as possible.

A Money Marketing poll showed 86% of respondents said they did not feel it was acceptable that the Woodford scandal remains unresolved close to three years later, with thousands of investors waiting to get some of their money back. 

High risk investments

So, what is high risk for investors?

For those paying for regulated advice it’s established how to correctly check risk versus suitability.

‘Cart before the horse’ comes to mind for the way we are currently regulated 

However as the FCA hikes its membership rates, adviser charging costs appear too expensive for the majority.

Self-managed investments transacted on an execution-only basis (an apt moniker) do not have to consider suitability, and this is where the regulator should give its attention.

Single share, ETFS, CFDs and FX investments are being sold by the bucket loads by the fintechs with no regard for suitability which can be very high risk, particularly for the young.  

‘Cart before the horse’ comes to mind for the way we are currently regulated.

The investment opportunity is the main driver for investors and the financial advice the delivery.

The highest quality financial advice will not protect an investor from a failing investment in the future.

The only sure-fire way to protect the public from high-risk investments is to regulate the investments taken to market, particularly on an execution only basis.

I can spot a rubbish investment opportunity, so let’s hope the regulator can and gets tougher on the actual products taken to market and not just its promotion and financial advice provided.                                

The post Kim North: Dear FCA, product regulation is the real risk appeared first on Money Marketing.

On 6 April 2022 the Divorce, Dissolution and Separation Act 2020 came into force for divorce proceedings applicable for all marriages and civil partnerships.

According to The Law Society, the new legislation will:

• Replace the ‘five facts’ with a new requirement to provide a statement of irretrievable breakdown;
• Remove the possibility of contesting the divorce; Introduce an option for a joint application; and
• Make sure language is in plain English — for example, change ‘decree nisi’ to ‘conditional order’, and change ‘decree absolute’ to ‘final order’.

According to the latest Office for National Statistics figures, in 2020 there were 103,592 divorces granted in England and Wales. The UK government has introduced a new online service to accommodate the divorce act changes.

Advisers may be able to speed up the pension companies’ administration

As all financial planners should know, pension sharing orders are used to split pensions in the event of divorce. Most financial orders in divorce are dealt with by consent, but the Family Court Statistics for 2019, which are the latest, show that less than 12% of divorces provided for any pension order.

Pensions are, however, becoming increasingly contested in UK divorces.

Arbitration service

Many financial advisers act as an arbitration service, helping divorcing clients by saving them from going to court. The fee for filing a divorce petition in England and Wales is currently £550, with a family lawyer’s fees on top. It is therefore vital advisers understand the new divorce rules to be able to correctly advise separating clients.

Now is the time for more financial advisers to advise divorcing clients and use the new online divorce procedure, instead of the courts

Family lawyers for years have complained about the complexity of pension sharing or offset: the slow response by pension companies, first providing information and then applying the implementation of the orders.

Many advisers have a long and responsive relationship with pension companies and may be able to speed up the company’s administration for the benefit of their clients. Family lawyers find it difficult to get the information they need quickly and if there are errors they may not know.

Crucial role of gender

If you are to help separating clients, it is important to understand the UK’s overall gender-specific pension statistics. There is a 41% gap between male and female pension provision — one of the worst gaps in Europe. Women’s pension wealth is approximately a quarter of men’s.

Family lawyers find it difficult to get the information they need quickly

The fintechs are trying to educate about the importance of long-term financial planning but, if you count the gender split of investment platform app users, women make up only 24%.

Today I used Google to search for ‘women’s pensions’, expecting to see the likes of the global fund managers and pension companies listed high. I was disappointed. The Financial Ombudsman Service’s complaint procedure and Waspi (Women Against State Pension Inequality) came in the top-four rankings. This would put off anybody looking to start a pension and particularly working women, who list ‘lack of confidence’ as the main reason not to invest.

If you are to help separating clients, it is important to understand the UK’s overall gender-specific pension statistics

We must acknowledge search engines lead the way when people want to find out something. Google’s current TV advertising uses the strapline, ‘The more we learn, the closer we get,’ which is what the financial services industry should adapt as its mantra.

Pension companies and fund managers also need to ensure the search engine optimisation includes the correct words used in a search for pension investing. Women really do need to invest more in pensions.

There is lots of technical information about pensions and divorce from the larger pension companies, written for financial advisers, not divorcees. As one in two marriages ends in divorce, now is the time for more financial advisers to advise divorcing clients and use the new online divorce procedure, instead of the courts.

It is vital advisers understand the new divorce rules to be able to correctly advise separating clients

For those who have advised divorcing clients for years, it is  a little easier now with no-fault divorces available. Having advised on divorce and bereavement many times, I recommend taking a box of tissues and having separate meetings, and of course up-to-date technical knowledge.

Financial advisers should be advising married clients on pensions and divorce, with more technical advisers helping family lawyers with pension sharing.

Kim North is managing director at Technology & Technical

This article featured in the May 2022 edition of MM. 

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The UK pension market is worth around £2.4bn. Mintel’s 2021 pensions research found 37% of adults wanted to set up a new pension plan in the next two years.

On the flip side, individual pension product sales have been in long-term decline due to the restrictions of receiving the income and tax-free cash, and the complexity of pension regulations and taxation. Other investments, particularly Isas, are on the rise.

However, during the height of the Covid-19 pandemic there has been a temporary boost in new pension plans.

The impact of auto-enrolment as well as the plethora of online self-service propositions will undoubtedly continue to influence investor behaviour.

Someone moving to a collective DC pension won’t know what’s happening to their work pension

It is time for marketing campaigns tasked with educating people that investment performance in pensions matters more than anything else.

This is where the investment houses should step up because they have both funds and expertise. Sadly, the operating costs and additional regulatory responsibilities mean some have no appetite for hosting their own Sipp platform.

New opportunity

There is, however, a new opportunity for investment houses that do not want to market their own Sipp investments.

From August this year, we will see the introduction of collective defined contribution (DC) schemes that pool members’ contributions, share longevity risk and offer a target income based on contributions and investment assumptions.

A draft paper on collective DC pensions was issued in January by The Pensions Regulator (TPR), which — like any regulatory body — wants to get ahead of potential issues. Specifically in this case, the Brighton-based authority wants to confirm collective DC pension providers are ensuring members understand all pension communications they receive, as well as the investment and retirement income variance risks.

The boost in pension pick-up during the pandemic is a positive thing, but we must ensure people understand these changes

As a lifelong financial adviser, I know the chances of the public understanding a new collective DC pension, governed by hundreds of pages of legislation and tax law, are remote. As for investment risk, very few understand risk and the impact it has on returns. The fact that collective DC pension income will rise and fall is the major risk of the new pension.

You just have to look under the bonnet, and take into context the wider economic situation, to understand why.

When writing this article, I looked closely at target date funds over recent years and the performance of some is erratic, to say the least. As target funds move towards the retirement date, the percentage of bonds held increases, on average to  around 50% of the investment close to retirement.

It is time for marketing campaigns tasked with educating people that investment performance in pensions matters more than anything else

Bonds have been adversely affected by central bank signals that interest rate rises are drawing closer, sparking a steep bond price decline. I leave it to you to study the inverted bond yield curve assumptions, then make your own conclusion whether a majority holding of bonds is currently the right or wrong way to invest in a retirement date fund.

The opportunity for equities, as hopefully we see the global pandemic reclassified as an epidemic, could be considerable in both growth and value terms.

Those working at TPR believe collective DC pensions have the potential to change the pension landscape. They could continue to receive greater traction as defined benefit (DB) pension trustees and managers look at collective DC pensions for their thousands of members, to lighten their own responsibilities.

Matters for concern

However, I still have concerns. For instance, I worry the person moving from a DB pension to a collective DC scheme will have no idea what’s happening to their workplace pension. They also may not be aware of the loss of the ‘gold plated’ guaranteed income from their existing DB pension scheme, which is no longer offered for future contributions.

Those working at TPR believe collective DC pensions have the potential to change the pension landscape

For some consumers, this could mean real change, and it is important that those affected understand what it could do to their financial situation.

The boost in pension pick-up during the pandemic is a positive thing, but we must ensure people understand these changes and which factors ultimately are influencing their retirement income.

Kim North is managing director at Technology & Technical

This article featured in the March 2022 edition of MM.

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First and foremost is climate change. COP26 made some impact with world leaders agreeing to try to reach the 1.5c Paris scenario and reduce carbon emissions. Recently ESG fund launches dominate the landscape – about time too – and are helping the finance industry make the world a better place for future generations.    

The rise in house prices and generous DB pension schemes means baby boomers and the older silent generation hold the wealth, whilst Gen Z find it near impossible to buy the home of their dreams. They will often have to save for as long as nine years to have a deposit, according to Yorkshire Building Society.     

Everyone in financial services has a responsibility to help the young and future generations understand the importance of saving for the future. These young lives will have increased life expectancy but lower birth rates meaning there will be longer retirements and greater need for funded elderly care.      

When I was at ‘sales school’ in the 1980s we were driven to sell to strangers by pushing their ‘fear or greed’ inclination. It remains true that financial products need to be sold as they are not willingly bought. The regulators have made the cost for financial advice through adviser charging too high an entry for Gen Z who are left to DIY invest. According to Boring Money, AUM across all major DIY investment providers reached £360bn at Quarter 3 2021, up 33% from the end of Quarter 2 2020. And according to Deloitte, there are c2,500 UK FinTechs many chasing the little spare cash of the Gen Z. For example, 61.47% of Freetrade’s UK retail investors are aged under 35 with 21.92% between 18-25, offering a free share if an ISA is transferred to them.  

The young tend to always want to be risk takers and we need the life and pension industry to attract the attention of younger investors to inform them about and protect them from high-risk single share purchasing. The industry must evidence why collectives managed daily by expert fund managers or synthetic trackers over time outperform DIY investing and are for most, the better risk option.  

The big traditional life and pensions companies must teach the saving public about regular savings, the basics of investments and the benefits of compound interest. It annoys me that whilst cash ISAs pay less than 1%, inflation is at a ten year high, galloping on currently at 4.2%. The British people saved a whopping £4.8bn into cash ISAs in a year the latest figures from 2019/2020 show, with a greater number of women saving in cash ISAs as they tend to be more risk averse. Wesleyan research states 47% of us aren’t even sure what inflation is. Every day this money is worth less and there is no obligation on providers to educate on the damaging effect of inflation on cash.   

A study by Now: Pensions showed that 86% of 18–35-year old respondents believed more should be taught about pensions; 23% said they would be more inclined to save if they had a better understanding of pensions. It will be a watershed moment when the basics of financial planning are mandated in the school curriculum and more emphasis given in universities. Sadly, I doubt that this will be in my lifetime.        

Kim North is managing director at Technology & Technical  

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A discussion paper issued this month by TPR discussing value for money in DC pensions whilst accumulating does not appear to put the customer first. The TPR wants consistent assessments on value for money, focusing on metrics to enable meaningful comparisons between schemes. This was an unusual paper to read. I’m such a nerd I read many FCA papers a year and the tonal feel of the TPR’s discussion paper makes me think it is written for DB scheme trustees in the 1990s.    

In the discussion paper there is little mention of the value of financial advice provided to the pension policy holder. As readers know, financial advice nearly always results in better client outcomes than DIY investing. Each pension client is different with varying risk appetite, aspirations and knowledge. Some like regular two hour meetings with a financial adviser so they can understand all options, others regard seeing a financial adviser as painful as visiting their dentist. Some clients collect stacks of financial services documents in a carrier bag, while others prefer paperless apps with instant valuations.  

Vary rarely is retirement financial planning the same for one person to another.            

The issue of charges on DC pensions has been under the spotlight for years and the expensive legacy funds are slowly being brought under reasonable charges. The DWP Survey of 2020 found that for qualifying DC pensions the average charge is 0.48% pa is significantly below the 0.75% cap. It’s madness to relax the 0.75% cap on smaller schemes DC default funds from October to allow the fund managers freedom to invest in illiquid funds. The charge cap provides a surety that charges are not eroding gains and that illiquid asset investment – aka Woodfood – are not invested in, as these can be extremely high risk.  

I truly believe that investment performance is the most important issue in investing for the long term. Nest pension scheme funds failed to hit annual performance benchmarks during 2019/20 so the Nest charges are not as important as poor investment returns. Negative returns due to poor performance is the biggest client concern.  

Financial services customer service for the majority is now based on the functionality of an app where chat bots instantly provide guidance, and new pension policies are available within hours. 

This TPR discussion paper does not cover the benefits of the cost versus the added value of the provision of client specific financial advice, or the advances in technology that both offer better pension in accumulation outcomes, communication and client satisfaction.  

Kim North is managing director at Technology & Technical 

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Many years ago I set up an IFA business in the City of London. My brilliant business partner, Jo Smith was on the Society of Financial Advisers (SOFA) board and was senior examiner of what is now AF7, the pension transfer exam. We provided technical training to financial advisers and proudly paid our SOFA membership fee and displayed the SOFA logo in our street facing window.

Move forward 20 years and we are in the position where SOFA’s replacement, the Personal Finance Society (PFS) is rudderless without a CEO. The PFS is the oldest of the CII societies and is the largest membership of financial advisers in the UK dedicated to building trust in the financial planning profession.  Not only is the PFS without a leader, the Chartered Insurance Institute (CII) intends to deregister the PFS as an independent entity.

The CII will formally consult with financial planners later this year to seek their views on the PFS. I believe it is important that financial advisers speak up to let their thoughts be heard.

Robert Reid, an ex-PFS president says: “The CII management has failed to realise the PFS is not a corporate trading company but rather a member body for advisers. The past presidents needed to underline the seriousness of the issues that this had created. We have set up PFS Solo to help advisers understand the importance of having a representative adviser trade body and how to vote at the CII AGM. Folding the PFS into the CII will lose the much-needed focus needed for effective lobbying and interaction with many other bodies such as the FCA and HMT. This is not the time to emasculate the PFS.”

Many readers will know that in the past there were more financial advisers, investment products could be bought over bank counters and “the man from the Pru” and the like served those no longer able to afford financial advice due to adviser charging. When we wanted input to the regulator or any rule change or guidance, we looked to our trade body first.

The need for a financial adviser membership body has not changed. I’ve just spent considered time reviewing financial advisers’ Money Marketing awards submissions. Most entries talk about their PFS membership, how they network and learn through regional PFS Institutes; how they push for chartered status, use PFS resources to get there, and how they share their frustrations and thoughts with the PFS.

As stated on IFA Rowley Turton’s website Rowley Turton: “The concept of chartered professionalism traces its roots back many centuries, to the years following the Norman invasion in 1066. That’s some track record. And in the 21st century, chartered is more relevant than ever in terms of winning and securing public trust.”

This should be the PFS raison d’etre and all effort should be made to preserve this valuable member body for both advisers and the public. If the public looked today at the CII website for latest news there is no mention of personal financial planning, and this may remain the case even if the PFS is lost within the huge CII. The public need the PFS as do advisers.

Marine, aviation and caravan insurance is like chalk and cheese compared to personal financial planning. The lobbying requirements and links to government are very different.  It is therefore important that financial advisers stand together in a separate member body that represents the unique needs of professional financial advice and the public.

Kim North is managing director at Technology & Technical

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