Weekend Digest for IFAs, Financial Planners & Paraplanners (1st & 2nd Dec)


Here’s the latest installment of Adviser Digest, with a summary of the interesting articles this week. Click on the title to read the full article(opens new window).                                                                                                                                                                                             


How To Be A ‘Purple Cow’ in the Post RDR World

 This article in MM by Martin Bamford of Informed Choice centres on why it is important for adviser firms to differentiate themselves from the competition.

Being better is not necessarily a competitive advantage nor is it credible to go about telling everybody that you are better than every one of your competitors.

Citing Seth Godin’s book Purple Cow, Bamford explained that in a crowded market place, the key to success is finding a way to stand out. You need to become the purple cow in a field of monochrome Friesians. ‘There is a real danger that the Retail Distribution Review will turn us all into boring, regular bovines.’  He wrote.

 Martin points out that striving for higher standards ( i.e being chartered), remaining truly independent and having innovative fee structure that truly reflects the value an adviser offers are the key areas of competitive advantage for firms in a post- RDR world.


FSA Considers Platform Legacy Commission Ban

This article in InvestmentWeek hinted that the FSA has begun informal discussions with key industry players about a potential ban on all fund commission payments from 2014.

It appears that this will only affect business written on platforms but will not affect legacy life and pension contracts.

This will effectively end trail commission to advisers on business written on platform pre RDR, including legacy arrangements.

An unnamed source is quoted as saying “The regulator is thinking about putting a time limit on when everyone needs to move over to new pricing models. It may even happen in one overnight big bang”

This clearly have several ramifications for adviser firms both in term of the revenue and value of the business. However, Rob Stevenson of Kingmaker Group told me on twitter that there won’t be any legacy trail commission still being paid by 2014 as all asset are effectively disturbed if any advice is provided to client after January 2013, even if the advice is for client to do nothing.  He noted that providers cannot pre-judge outcome of any client-adviser contact.

This all goes to show why it is important for advisers to be proactive in moving existing client to the new fee model.


FSA Sets Out How Adviser Business Models Will Be Tested

This article in FundWeb reports that the FCA will explicitly test advisers’ business models as part of proposed changes to the basic requirements firms have to meet to become and stay authorised.

It sets out the  basic criteria that all firms must meet to gain and remain authorised. These are known as “threshold conditions”.

The regulator sets out the following areas firms should consider to prove the strength of their business model to the FCA;

  1. the assumptions the firm has relied on, the rationale behind the business model, the pricing and product strategy and the needs of and risks to consumers;
  2. how the firm intends to implement its business model, including areas such as outsourcing arrangements;
  3. sustainability, for example identifying and mitigating potential risks and contingency plans;
  4. areas a firm may wish to consider when its business model changes, such as the risks to and the impact of changes on the consumer.


What’s the Difference? Wealth Management Vs. Financial Planning

This article by Micheal Kitces in US-based publication AdviserOne discusses the recent findings of the Investment Management Consultants Association (IMCA) on the differences between financial planning and wealth management

The IMCA study sought to better define “wealth manrear early and their conclusions is that it is far more than just a fancy label for advice. Instead, it involves unique job tasks and specialized knowledge and skills that are different from financial planning and designed to serve a unique type of client: those with at least $5 million of net worth.

Kitces noted that it has become increasingly popular for many financial advisors to call themselves “wealth managers” to differentiate themselves.  The implications of the IMCA study is that some advisors are using a label that is not an accurate description of the knowledge they have and services they offer, and that those who really do wish to work in this area may need to get further training and education.

The IMCA paper titled “Defining Wealth Management: Serving High-Net-Worth Clients with a Distinct Body of Knowledgediscusses the results of  a Job Analysis Survey and concludes that wealth management is “a distinct field of practice through which qualified professionals help high-net-worth clients achieve their goals and objectives related to the accumulation, protection and distribution of wealth by applying a set of specialized knowledge and skills.

Kitces concludes that while wealth management is similar to financial planning, it’s not quite the same thing and doesn’t utilize the same knowledge and skills. For instances the  unique issues of business sales, corporate executive compensation and family dynamics that emerge at the intersection of traditional family issues and the transfer of very large amounts of money requires specific skills and expertise.


AXA Elevate New Pricing

Earlier this, AXA Elevate sets out it new pricing model and going by comments in industry press and twitter, it is being well received, especially for its simplicity.

Writing in his blog, Mark Polson of the Langcat wrote ‘AXA has done the decent thing and chopped its standard rates, whilst simplifying the structure a bit – still stepped but with fewer of them.’  His main criticisms (apart from AXA not checking this move with him first!) is that moving existing clients to this new structure doesn’t happen automatically and is effectively treated as advised event as it won’t happen until January.

The Langcat blog include a comparison of how the new pricing structure stands in relation to some of its competitors on ISA/GIA and SIPP.

The Platforum’s blog also commended AXA’s effort, noting that ‘there are no complicated tiers to calculate as the rate applies to the entire portfolios. This is particularly relevant for family linking accounts and multiple tax wrapper.’



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, thought 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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