Letter to Nic Ciccuti Money Marketing re: ‘IFA’
Good morning Nic and a Happy New Year
I agree with most of what you have said (read more) and I too know Robert quite well and
respect his views.
I was one of those you mention, in that I ‘graduated’ in 1995 after 10 years with
Equitable Life to become an IFA. For the first two years I was like a kid in a
sweetie shop – so much choice. But after a while I became dissatisfied and knew
there must be another world beyond the one I was in (Jonathan Livingstone
Seagull – a book I never understood!). I realised of course that despite my own
professionalism and probity I was still working within a commission-driven
sales environment and that ultimately it was impossible to provide the
long-term service and advice to my clients that I aspired to. If
I am to disagree with you on one point, a commission-based IFA can never be
unbiased no matter how hard he tries. Malcolm Murray at Transact puts it
perfectly: “If you want to know whether the advice you are receiving is
genuinely impartial/unbiased, you need only ask one question: ‘Who pays?’ if
the answer is anything other than: ‘me’ (the client), then impartiality is not
possible.
So, in 2001, Steve and I set up SGWM on the basis and principles of what we now
refer to as RDR. TCF is deeply imbedded in our fee-only culture and of course
CAR is a given. Although we appreciate that the term ‘Wealth Management’ is
much abused and even the spotty youth at NatWest is prepared to offer you a WM
‘service’ for your £10k premium bond winnings, it was not the case back then
and when we say we are WM’s that’s what we mean – we manage our clients’ wealth
(all of it), in other words we provide high quality financial planning and
investment management encompassing all of the client’s affairs.
We chose not to embrace ‘IFA’ for the reasons outlined above, although I do not
say that out of any sense of superiority, but when one considers that SJP to
name but one, run riot around the country pretending they are something they
are not and get away with it, one wonders whether there is any point
perpetuating the cause. Post 2012 I believe we shall be left with a bugg*rs
muddle frankly and Joe Public will be no better informed than he is now. It is
up to firms like us, Syndaxi and hundreds (thousands?) of others to promote the
cause and I do believe we shall win out.
My major concern with RDR is the ‘mass affluent’. The better off will be serviced
by us and those like us and we’re already geared up for it; Mrs Miggins can get
her ISA from Barclays (a shame but there we are), but what of the couple with
2.4 children with a combined income of say £50k. They’re doing well, they are
‘comfortable’ and they very much need good financial advice whether they
perceive it or not, but they can’t afford fees for financial advice; where on earth are they going to find say £1000 from with all the other pressures on their income? I don’t want them and they simply don’t deserve to be ripped off by the banks and I don’t know what the answer is.
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