If you do marketingy or contenty things in this fun-times industry, one of the things you’ll quickly work out is that there’s very little point in unleashing words of wisdom upon the financial world in August. This is because said world is largely on holiday and the parts of it that aren’t are running on the hamster dynamo wheel even faster than usual to keep the lights on while their colleagues are away for a fortnight bemoaning how much better holidays were before kids were involved.  

I’m assuming this is the reason why ALL THE THINGS have happened over the last week. In particular I have to commend the FCA on a top piece of trolling with a 31 July launch date for C**sumer D**y, with which you are all now complying, be you ever so grand or ever so humble. 

So we have an embarrassment of topics for the Update this week, and I’ll take just two. But in a masterstroke of prestidigitation, that two will seem like three but then resolve into one. This level of content mastery is the sort of thing that your marketing manager will tell you you simply don’t do in August, but they don’t make the laws. I make the laws. I AM the law. And if you don’t like it then it doesn’t matter because no-one’s reading this anyway because it’s August. 

(Before I do, though, can I punt Analyser a little bit? The system was born ready for the Duty but we’ve made updates anyway with a bunch of new datapoints that we have mainly got platforms and DFMs to complete – and Shame on those who haven’t and you know who you are. We’ve also (and here’s where it gets good) created new due diligence and comparison templates which hit the four pillars of the Duty square on the kisser. We’ve got catch-all ones and also a particular template about vulnerable clients. Subscribers will see a bunch of helpful stuff in your inboxes already, and if you’re not a subscriber (it’s £300pa for advice professionals) then now would be an Excellent time to rectify this. I’ll stop punting now.) 

Back to it, and here’s the first Thing. If you want something fun, go to your search engine of choice, type in ‘STJ.LN’ and then select a one month time period and…yikes. About a 25% drop in share price in a week. You can play the same game with the HL share price – only a 12% drop but still not good and m’friend the Motley Fool tells me it’s one of the most shorted shares on the LSE the noo.  

So what gives? Schadenfreude aside, SJP is still an advice firm amongst other things, and isn’t immune to big drops in net flows – when the Q2 stats come out you’ll see a sea of red and sad faces. Big listed firms like this don’t have the luxury of saying ‘nah, we’ll just pause worrying about taking on new clients for a while’; they have to keep running. Tough to do when people are raiding savings and investments to pay down mortgages. To put it into context, SJP did £3.4bn of net inflow in the first half of the year compared to £5.5bn in the same period in 2022. Still a lot – but nearly 40% down. I say again: yikes.  

Add to that a writedown of £860m with the new charge cap – limiting the ongoing product management charge to 0.85% from 1% but leaving all other charges intact – and you’re left with a feeling that investors like this sector in the good times, but if flows are tough and prices are under pressure those huge firms charging premium prices are going to find it difficult to generate shareholder returns, even if it’s marginally better for customer returns. Hold that thought. 

Second Thing: we also saw a chunky writedown in 1825’s value, and this piece suggests that firms expect their turnover to go down as a result of the requirement to optimise customer outcomes; the implication of course being that they aren’t being optimised at the moment. That feels a bit harsh and Eeyoreish to me. The regulator is interested in lots of things to do with the Duty as it flexes its muscles, but I suspect general advisory fees for ongoing service isn’t top of its list. Nonetheless, this is a time to make sure the homework is done. 

Third and final Thing. Over on the unlisted side of the market, you should take a look at NMA’s excellent PE-backed advice firm study. Of the top 34, only six increased their adviser count by more than 10% and some didn’t get any new advisers in the first half of this year.  Is this a battening down of the hatches from the big guys? It’s a lot harder to justify spending other people’s money when you’ve got monster growth targets for flows that you’re simply not meeting.  

So two things, or three things, but all about one thing – that cold east wind might just be starting to blow. A tube of Rolos to the first correspondent to tell me which author said that wind is cold and bitter and that a good many of us may wither… 

It’s a good time to make sure the basics are done. It’s a good time to be flexible, fleet of foot and nimble. It’s a good time to not have to sweat quarterly market returns because you overpromised in the good times. It’s a good time to have clients’ best interests at heart, but genuinely and not in a shiny way. That sounds like something most of you are very, very well suited up for. Prepare the hatches for battening and you’ll be fine. 

#LANGCATLINKS 

• M’colleague Alison from the burgeoning lang cat regulatory and public affairs team points out that the FCA has finally persuaded someone to take on the role of Chair of the statutory Practitioner Panel which has been vacant since January, and Matt Hammerstein of Barclays will be in charge of representing the views of practitioners to the regulator.  
• Said team did a v useful seminar on the Mansion House reforms on Monday – watch again here.  
• Would you like a ban on cold calling for financial products? Well, weigh in to this consultation then. I’m going to.  
• Embark Platform is now Scottish Widows Platform. We’ve updated Analyser; nice to have the logo for the firm where I started my career on the page.  
• And your music choice this week? Well, our own Jenny Smyth went Full Kate at the weekend; the army of Kates in which she served even made it to the papers. I’m not sure what the optimal number of Kates is, but it’s either one or a lot. So resistance is futile really…enjoy the red dress version.  

See you next week 

Mark