Weekend Digest for Financial Planners/Advisers & Paraplanners (16th & 17th March)


News this week that the FSA is planning to ban rebates on legacy business paid by fund groups to platforms from 2016 is bound to get platform bosses scratching their heads, wondering if the end is nigh…. given how difficult it’s been for many to turn a profit. If true, it’s a game changer but then again the fact that ‘the FSA declined to comment’ probably tells you all you need to know.

In this edition, it’s all about getting paid and we look at two articles on the subject of fees charging. Apparently, some of us are leaving money on the table, either by under-charging clients (now, that’s something I thought I’ll never hear in FS!) or by not collecting fees properly on platforms! 

We look at two other articles – one on the late change to the proposed new capped drawdown rules due to take effect on the 26th of March and the other on how to spot when people are telling porkies on their CVs.

Click on the title to read the full article (opens new window.) Enjoy…


Are You Charging Enough for Your Services?

Apparently, adviser are underselling their services, typically by discounting their fees when there is in fact no need to do so, according to this article in AdvisorOne by Gil Weinreich and the corresponding white paper titled ‘Pricing Your Value Unapologetically’  by Pusateri Consulting.  Although written with US-based advisers in mind, it is nonetheless relevant to those in the UK and indeed globally.

Behavioural economists tell us consumers will pay a premium for certainty while discounting uncertainty. The trouble is, there is too much uncertainty when it come investment advice. This problem notwithstanding, advisers are their own worse enemies and the most common ways they sabotage their own pricing strategy include;

  1. Offering discounts, even in the absence of client requests
  2. Pricing at low levels as a means of preemptively avoiding contentious fee discussions
  3. Varying fee arrangements with different clients

The author of the report makes an interesting point that while top quartile advisers tend to charge more than double the price of the bottom-quartile pricers, it is the low-priced advisers that often offer superior service (probably in attempt to justify what they are already charging.)

In order to counterbalance the uncertainty of investments, advisers need to be reminded that they can effectively promise a certain client experience—a rigorous process and service standards” says the author of the report.

The paper also recommends adhering to standards of fairness, consistency and transparency as a means of setting fees. It defines fairness as “exchanging value for fees where the value delivered is either equal to, or exceeds, the fees charged,” and cites the medical profession as an example of a field in which outcomes are uncertain but where it is understood that “clients or patients are paying for expertise and judgment.”


Advisers Not Getting Paid Due To Complexities On Platform 

Still on the subject of getting paid, this piece in the FTAdviser is based on an observation by Verona Smith of Cofunds that some advisers aren’t receiving their fees from some on-platform accounts because advisers fail to define where funds will come from when clients’ cash accounts run low.

This is down to the fact that like Cofunds, many platforms need advisers to select ‘sell-down’ funds. A sell-down mandate identifies the funds/wrapper that the client and the advisers are happy to sell units from to top up the cash account in order to pay the adviser charge. Some platforms use the natural income from the portfolio to top up the cash account.

So if you haven’t reconciled your income on your CRM/Back Office systems recently to ensure that correct amounts are being paid on each client’s portfolio, you have the rest of your weekend cut out for you and no, you don’t need to read the rest of this article.


Drawdown Rule Change, Again!

This piece on Suffolk Life’s Talking Point explains the latest change to capped drawdown rules, specifically with regards to transferring Pre-April 2011 drawdown.

Under the transitional rules effective since April 2011, transferring a Pre-April 2011 drawdown will force an income review, client will move to a 3-yearly review and almost certainly receive lower income due to lower gilt yields.

These rules remained in place even after the ‘U-turn’ from maximum 100% GAD back to 120% was initially announced.

However, the latest changes mean that this will not now be the case and transferring a capped drawdown plan from one provider to another, will not force a review if the plan anniversary falls after 26th March 2013.


Hiring: 80% of CV Are Intentionally Misleading

This article on Business Insider questions the place of CVs in a 21st century recruitment process.  Apparently, 80% of resumes are intentionally misleading and the most common lies, in order of appearance, are:

  1. Hiding employment gaps
  2. Bogus degrees
  3. Experience embellishment
  4. Claiming higher salary from previous jobs
  5. Raised grade point average (GPA)

This article suggests that by using social media (presumable because people are less likely to lie on their LinkedIn account because it’s public) and psychometric testing, applicants stand a lesser chance of lying their way into a job. So what do advisers do spot ‘porkies’ on a potential employee’s CV?



I hope you have enjoyed this and hopefully it’ll make you job a little easier! As paraplanners, that’s what we do! As usual, thoughts and comments are welcome. Enjoy your weekend!







Abraham Okusanya
Abraham is the founder of FinalytiQ, a research consultancy for platforms, asset managers, and advisory firms. Recognised as one of the country’s leading experts in retirement income, platforms and investment propositions, Abraham has authored several papers on these subjects and delivered talks to the Personal Finance Society, The FCA and several conferences across the country.

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