I started the day yesterday morning in the company of Justin Urquhart Stewart, Paul Lewis and Stephanie Flanders.
After a sleepless night in a noisy hotel room on Birmingham’s Broad Street, this was the start of the Personal Finance Society (PFS) National Conference.
Around 1,600 financial advisers had gathered at the International Convention Centre to listen to experts debate the hot topics of the day, meet product and fund providers, and network with fellow professionals.
Following an introduction from the popular investment commentator Justin Urquhart Stewart, prize-winning personal finance journalist and BBC broadcaster Paul Lewis took the stage.
I was sending tweets during his presentation, and have inserted a few of these below.
Paul is an excellent presenter, with the audience thoroughly enjoying his self-deprecating opening, mocking a rather youthful looking photo of himself on the big screen as “the only one I could find.” He also explained that 1,500 financial advisers was a more daunting audience than 1.25m radio listeners.
“There are more excellent financial advisers than ever before,” says @paullewismoney #beyondbetter
— Martin Bamford (@martinbamford) November 6, 2014
He quickly went on to be less popular with a large segment of the audience, despite talking a great deal of common sense. Let me explain.
Paul’s presentation highlighted some of the sins of the past in the retail financial services sector. Much of this was before my time of course, and not something Informed Choice had any involvement with at all, but Paul was right to highlight the problems stemming from pensions mis-selling, low cost endowments and (most recently) payment protection insurance.
.@paullewismoney doing great job talking about the ghosts of commission, including risk for reward and active fund management #beyondbetter — Martin Bamford (@martinbamford) November 6, 2014
Much of Paul’s presentation was devoted to the ‘ghosts’ of commission, which he described as having been at the heart of all mis-selling scandals.
Our sector has been effectively commission-free since the Retail Distribution Review (RDR) was introduced on 31st December 2012, with a few ongoing exceptions. This was the ‘addiction’ mentioned in the title of this post.
Talking about the ghosts of commission was talking about problems which should now be in the past, although some national IFA firms do their best to work around the commission ban and strike commercial deals designed to influence product select. Paul had a few choice words for Sesame in particular who were recently fined by the FCA for doing just that.
Lots of weasel words around restricted advisers. Are you independent? Yes, or walk away. @paullewismoney #beyondbetter
— Martin Bamford (@martinbamford) November 6, 2014
Moving on to talk about choosing an adviser, Paul explained the importance of avoiding ‘restricted’ advisers; those who are not independent. He highlighted their use of weasel words in describing services in an attempt to make them sound as comprehensive as those that can be provided by an independent financial adviser.
With many of the financial advisers in the room a part of those IFA networks doing shady deals (which walk and quack like commission) and a fair few restricted advisers in the room, Paul was quickly lining up a few detractors. It got better.
Filters for choosing a financial adviser from @paullewismoney – independent, Chartered, charges a fee upfront in £££ #beyondbetter
— Martin Bamford (@martinbamford) November 6, 2014
Paul went on to describe three ‘filters’ to apply when choosing a financial adviser. First, they should be independent – no surprises there given his obvious contempt for restricted advisers.
Second, they should be suitably qualified as a Chartered Financial Planner and/or a Certified Financial Planner. More of the audience started to grumble, as Chartered or CFP remains a qualification to which many financial advisers aspire (although all six of the Financial Planners at Informed Choice are qualified at or above this level).
Thirdly, Paul described the importance of choosing a financial adviser who charges an upfront fee expressed as a monetary amount.
Another group of delegates – those who charge fees based on the size of the the investments they recommend, a fee structure which looks an awful lot like the commission model of old – joined the grumbling about Paul Lewis brigade.
By the end of his speech, it’s fair to say a reasonable number of the 1,600 delegates in the room were not his biggest fans. I suspect he isn’t losing much sleep over this.
As I wandered around the exhibition hall during the rest of the day, a fairly common conversation I overheard was criticisms of his views on mis-selling, commission, qualifications and independence. This was such a shame.
Right now we have a fantastic opportunity to complete the evolution from industry to profession. We have so much to learn from the sins of the past, and so much opportunity to embrace professional standards in the future.
“We have a fantastic opportunity to complete the evolution from industry to profession.” [tweet this]
I got the impression yesterday that many delegates were unable or unwilling, for whatever reason, to let go of their ties to outdated sales practices and truly embrace what the future holds for financial advisers; properly qualified, client-centric advisers with transparent and fair charging structures.
Can’t agree with @paullewismoney on hourly rates. Terrible charging structure for consumers #beyondbetter — Martin Bamford (@martinbamford) November 6, 2014
Whilst I didn’t agree with everything Paul had to say yesterday morning – I would love the opportunity to explain why charging hourly fees is bad news for most investors and why the commercial realities of running a regulated firm means serving every socio-economic group is unrealistic – he is a man with strongly held opinions and I respect his right to express those opinions.
I’d love to help someone with a £10,000 pension fund, but regulated commercial reality prevents that @paullewismoney #beyondbetter — Martin Bamford (@martinbamford) November 6, 2014
