Keep calm and carry on

I suspect most of you are fed up with the electronic trade news feeds, feeding us a diet of gloom and doom on the start of RDR. The high water mark was the “Standard Life predicts IFA extinction within the year” story which was simply a miscommunication between an internal PR and a keen trade journo.

It seems to me that advisers and adviser businesses have always been adaptable, resilient and agile enough to adapt to environment changes. The establishment in our sector ~ the largest insurance companies, the banks, the “regulator classes” - have had a decade long antipathy to smaller adviser firms. But here is the reason why predictions of adviser extinction are just plain wrong.

Advisers like customers. 

They like to talk to them, persuade them to get organised and do the right thing for themselves and their families and in that they are the subset of our sector that are truly different. The historical perspective that the adviser layer of the value chain was the source of mis-selling is just wrong. The heart of the problem were the product structures provided by financial service providers and the front end loading to pay distributors. The latter was created because providers did not want to absorb marketing and distribution risk. The product defects usually came from the providers’ compulsion to shift as many different types of risk to customers. Every product mis-selling scandal had its roots in the product design.

The imminent demise of advisers has been predicted many times before, but they have proved their ability to adapt, even if each shift in the environment sees some falling by the wayside. Clients still have risks that need mitigating and enough of them value the expertise advisers provide, so I’m sure that the prophets of doom will once again be confounded.