Two weeks in a row where I punt something before lowering you gently into the Waters of Whimsy? That’s how you know it’s serious. Please be giving your fullest attention to these notices:
- State of the Adviser Nation still needs you. Our biggest research exercise of the year is live now. We’ve got a way to go to hit our very stretching numbers and if you want me to shut up about it, then take the survey. I’ll say it nicer. Please could you take a little time and help us out? You can find it here please and thank you. Oh, and we’ve got a special track in it for paraplanners; we really want to get at least 100-150 of you so we have some proper data. Pleeeeze?
- I CRAVE breakfast with you tomorrow in London. Not just me, also Financial Software Ltd. We’re discussing excess reportable income on offshore funds. You think you don’t care about this, but you do really, especially for wealthier clients and with your Consumer Duty hat on. Come to The Trading House, have nice food and geek out for an hour or so. It’ll be fun. All welcome. Book here, free of charge.
And so on.
It’s been quite the epistolary week, brethren. Just as we were loading last week’s Update into the patented FeliCon Trebuchet 1000™ (with the optional Cameron ReEntry Module upgrade which keeps Updates reappearing when least expected for up to 7.5 years), yon stalwarts over at the FCA sent an absolute belter of a Dear CEO letter. We’ll get back to that in a moment, but at some point in the last 24 hours the auto-satirising Suella Braverman also launched her own epistimissile right down the eager gullet of the right-wing press and now I’m wondering what it is about this week that has got everyone so punchy in letter form? And why is it being described as a resignation letter when she got emptied? I think we should be told.
(I’m coming back to the FCA but before that I think we should balance things up with a couple of much cooler letters. We can do no better than turning to Letters of Note. Here are just a couple of the best ones, like this one (contains language) from Dorothy Parker and this one from the incomparable Kurt Vonnegut.)
Anyway! Here’s the Dear CEO letter which I doubt will be making it into any compilations this Christmas. Lois over at Money Marketing has done a good piece on it and it’s worth reading this slightly more measured Pinsent Masons take too.
Much of the letter will feel like it doesn’t really apply to you if you’re an IFA / financial planner; a lot is aimed squarely at the expensive watch and hair-like-a-lion (© Samantha Lynn) brigade. But there are some things you should take note of, and I’ll highlight just three:
Vulnerable clients – hoooooooooft. I’ll quote: “We expect your firm to reassess the vulnerability status of your consumers based on our guidance, particularly the 49% of portfolio managers and 69% of stockbrokers from the wealth data survey who identified no vulnerable consumers, even though 50% of us will be classified as vulnerable over our lifetime.” It may not come as a galloping shock that any signs of this kind of total bobbins from the advisory sector will be met with equal dripping unpleasantness. If I were Consumer Duty Guy in these businesses, I’d be making this priority one.
Price / value – yeah-yeah, that old chestnut. But I’ll quote again: “We continue to see firms charging for services which are not delivered (such as ongoing advice)…and providing a product or service which does not align with the needs of consumers (such as an expensive discretionary offering for a low-risk consumer).” Hmmmm – what might we divine from this? Might we be seeing a focus on what Aussies call fee-for-no-service? Might we see some cases about repayment of ongoing charges where there hasn’t been any? And might we start to look at why some clients are in a DFM portfolio – even, dare I hazard the thought – a DFM MPS portfolio with a total cost chain of 1.8% or 2% when they could easily get out for a lot less and achieve the same thing?
Data-led regulation is here, get used to it – you hate surveys (except ours) but lots of people hate lots of things. I, for example, hate Mumford & Sons, but they’ve sold over 14 million albums. That’s important but not as important as the fact the FCA is going to be using your data to regulate you in a more targeted way. Here’s a last quote: “We welcome the 99% response rate last year to our data survey. This resulted in a number of interventions, skilled person reviews and improvements…We will build on this by sending all firms a further survey in December 2023, which will be tailored to risks posed by your firm’s business model…Our supervision will become more targeted, intrusive and assertive.”
The line is blurring between IFAs, financial planners and wealth managers all the time. That’s good – planning is something the leonine lot are getting their perfectly coiffed heads around and planners from an advisory background are working out they can do pretty much everything wealth managers can do for a lot less money. But guess what? What starts up there soon ends up here and it would be a colossal mistake to think that the findings that have led to this remarkable bit of writing won’t apply to the wider advisory space.
A final thought for what is a long Update this week. I’ve nicked this from someone very wise who actually is Consumer Duty Guy in a big firm. His point: the sugar rush you get from marking everything green in your assessments is going to pass very quickly when you realise you’ve got to downgrade your assessments to amber or red next time round. And when you’re sending in data to the regulator showing how assessments have changed year on year, you can bet that sort of pattern will get picked up quickly, but not as quickly as “everything’s fine, nothing to see here”. So get the work done. It’s clear that some of you really are.
Phew! That’s been a tough one. Let’s rebalance our chakras and make next week one of peace, love, and understanding. It’ll take discipline but we can do it. Together. Who’s with me? Anyone? No? Just me then.
Links below and your music choice this week? It’s got to be loud and probably preposterous and full of threat that doesn’t signify anything. Am I wrong or is this a time for Rammstein? I’m not wrong. It’s a time for Rammstein, and particularly Du Hast. Enjoy…
See you next week