I am far from anti-IFA but in certain circumstances my priority is the greater good of the industry
On a recent golf day, an adviser acquainted with my various scribbles asked me if I was Auntie Ivy. I was lost for words. Although my wife might describe my hearing as selective, even she would not identify it as defective. As it turns out, he actually said “anti-IFA”. I was relieved, but then rather nonplussed. My opinion (and of course that’s all it is) might occasionally be at odds with trade magazines’ readership, but the anti-IFA jibe came as a surprise.
The cause of my inquisitor’s playful (he tells me) ribbing was in response to missives I have written that he claims read as adversarial.
Mea culpa – I certainly challenge those advisers you and I know who perform tenuous (and tedious) investment management using passive model portfolios simply to command an ongoing ad valorem fee, attempting to justify associated financial planning charges. I question platform facilitation of fees, thus maintaining the pre-RDR client experience. I suggest advisers pay the platform fee, rather than the client. You get the picture.
But I am not anti-IFA. I used to be an adviser (admittedly 40 years ago, and for only six years). I have an IFA, whose service (and badinage) I value. We have advice businesses in the UK, Europe and Africa that choose us as their proposition consultants and/or investment advisers.
There are others who choose to use me as their external investment committee member, and yet more who ask for guidance in that regard. Our annual revenue from adviser clients forms close to 25 per cent of our total income – not insignificant.
Commercially, then, advice is important to us. That said, we do not play the PR card. We do not profess to do business coaching or partake in quasi-scientific behavioural rah-rah self-help sessions redolent of 1980s motivational presentations, while organisers unceremoniously pocket provider-fed sponsorship fees.
We provide consultancy services across asset management and distribution (you may not like the term but that is the reality – you are a distributor of funds. Try running a portfolio of securities).
We formulate and perform due diligence on investment propositions, as we are trusted to know our investment stuff technically, marketing intimately and a bit about customers coincidentally. Where necessary, we hire in lawyers and wider operational expertise we do not possess to get the job done.
If you need help, we will tell you and heal you. If you are great, you probably already knew that but you will pay us for the confirmation.
Like quality advice, investment consultancy is about having a set of skills, experience, first class connections and associated insights that clients can leverage to fine tune (or in some cases completely upend) their current marketing or propositional strategy.
It is not (in our case at least) a PR role. I do not feel the need to champion active management or deride passive advocates. I do not need a commercial driver to fine tune my principles in order to earn a crust.
Where there are conflicts of interest between clients, I withdraw from debate but, generally, I am carefree enough to say what I think.
Despite possessing the greatest potential benefit to customers, advice is the most expensive and vulnerable discipline in our industry. I will be damned if I suffer its occasional fools gladly.
The FCA’s platform market study is a case in point. I have been closely associated with the development of adviser platforms via M&G’s involvement setting up Cofunds, through Selestia’s online emergence and ultimately Old Mutual Wealth’s vertically integrated model.
"The idea of the client paying anything more than £10 a month for a platform clearly created to make the adviser’s life easier never sat comfortably with me – especially now I am a paying client"
I am a great admirer of Nucleus chief executive David Ferguson’s indefatigable championing of quality advice and customer advocacy.
Despite this scaffolding of support, the idea of the client paying anything more than £10 a month for a platform clearly created to make the adviser’s life easier never sat comfortably with me – especially now I am a paying client.
Some of the platform defence statements by advisers are debatable and might have been better internalised. That said, during the platform study consulting period, I found the FCA team at once appreciative of platform services yet disparate on clients’ advantage.
Most team members had little understanding of the history of platform development and so had limited context within which to ingeniously apply the data they painstakingly aggregated.
The suggestion that platform tools like asset allocation or cashflow modelling are adviser aids, and consequently inducements rather than client benefits, is rather like saying X-rays make diagnosis easier and hence are an aid to consultant surgeons rather than a patient benefit. This is plain nonsense.
The regulator steers past the less complex point – utility platforms simply acting as trading and custody kit should be paid for by the adviser. That is a personal view I am happy to debate with anyone.
Similarly, the idea that your average Joe or Julie can unadvisedly robo his or her way to financial contentment is, for the time being at least, patent nonsense peddled by consultants whose business models require them to stand in the “look at me, I know what AI stands for!” tech-garnished vanguard. As we used to say, pioneers get scalped.
I write this stuff because I care about quality financial services and associated client outcomes. I am not anti-IFA but I am certainly an advocate of top-notch, fully-integrated wealth management services, and dismissive of anything less.
Occasionally, you might get upset if you do not match my vision, but then you do not have to pay me. Just shout “Auntie Ivy”.
Graham Bentley is managing director of gbi2