It’s Christmas and whilst everybody is feeling festive – we thought we’d use the 12 Days of Christmas as inspiration and look at 12 ways FE has helped Advisers this year!
Kaavya Dijendranath
Digital Campaign Marketing Executive at FE
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Assessing suitability involves a great deal of judgement by Advisers on the appropriateness of an investment option for the client in front of them. In order to make the right decisions and get favourable client outcomes Advisers need to be competent in the nature of investments and have a deep understanding of the individual product or service they are recommending. To do this, they need to conduct objective research and due diligence of the options in consideration. In its recent thematic review on the matter, the FCA said that, reviewed firms which demonstrated good practice in assessing suitability had research and due diligence as a central function of their advice process, demonstrating that they had the client’s best interests at heart.
Have you thought about your brand?
What do Uber, AirBnb and Netflix have in common? Valued at $66 billion and $30 billion respectively, Uber and AirBnb are the world’s largest taxi and accommodation service albeit not owning a single vehicle or property. Similarly, valued at $42 billion, the content distribution service Netflix only recently started producing content yet is worth nearly as much as big production houses such as Time Warner and Century Fox. These brand valuations are thanks to the rise of the sharing economy within the service industries - causing significant change in consumer expectations, attitudes and behaviour. There is immense dependence on the ‘brand’ to stand for something and provide the promise of a level of service. Unlike product brands that can provide something tangible; what most professional services organisations sell, including financial advisers, is often intangible before point of sale and the benefits cannot be fully “experienced” until after purchase.
Earlier this summer, a statement from the newly appointed Director of Supervision - Wholesale, Investment and Specialists at the FCA – Megan Butler proved that suitability is right back on top of the regulator’s agenda as they believe ‘firms still need to up their game’ whilst demonstrating suitability within their portfolio recommendations. The statement warned that the regulator would continue its scrutiny of wealth management firms until they gain satisfactory evidence that firms are stepping up and looking at suitability ‘as the day job’ rather than a regulatory checkbox.
The topic of charges and fees is usually on the regulator’s radar. The RDR published in 2012 aimed to rectify ‘opaque charging structures’ within the advice market and since then the regulator has kept a close eye on the matter. Recently the FCA conducted a deep dive review of Adviser charging structures in its newly published Adviser survey report which found that 89% of the respondent advisers charged clients percentage fee, 44% had fixed fees and 27% reported hourly charges (titled ‘FCA survey of firms providing financial advice’, published on the 1st of July 2016 –click here to read in full). On the provider side too, across Europe there have been calls for improvement in the communication of fees and charging structures to the end investor (via KIIDS, PRIPS) in a bid to help investors navigate through the variety of charges that can erode/affect their portfolio. However, most investors remain unaware of hidden costs that are unaccounted for in glossy literature from product providers.
FE would like to congratulate all the winners of the Fund Manager of the Year Awards 2016. FE's Gary Wheeler and Mika-John Southworth presented the Global Group and UK Income awards to Fidelity International and Evenlode Income on the night (pictured below).
Fund Managers - the mythical sirens of the asset management industry lure in vast amounts of money and admiration with their perceived intellect and skills. As of April 2016, records show that managers in the UK are responsible for an impressive £928 billion held in investment products (stats from the Investment Association’s website). With some star managers managing over £800million in a single fund, it is safe to say that a handful of individuals hold the prosperity of many of the UK’s investors in their hands and often their judgments decide if money invested doubles in value or vanishes overnight.
Let’s for a moment rewind to the summer of 2012 – the personal finance section of the
Daily Telegraph published a research study that found that the television character most closely associated with the term ‘’financial adviser’’ was the market trader Del Boy, from the popular sitcom Only Fools and Horses.
Love it or hate it you cannot ignore the latest American import – robo advice. What many of us initially thought was a passing fad is now officially here to stay, as the FCA has advocated the adoption of ‘automated advice models’ as a means of delivering regulated advice ‘’more cheaply, efficiently and effectively’’.
First published in Professional Paraplanner Magazine, April 2016.
Advisers are not always expert stock pickers and shouldn’t have to be. Post RDR and in preparation for the looming sunset clause, more advisers are starting to recognise the benefit of allowing specialists to deal with their fund picking as a key strategy for spending more time with clients, reducing risk levels and operating costs. Results from the FE Adviser Survey 2016 were testament to this.