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PFS exclusive: Big or small, restricted or IFA, advisers must unite

Personal Finance Society chief executive Keith Richards tells Elliot Smith a pensions advice taskforce will tackle rising PI costs as he urges the advice sector to pull together

PFS exclusive: Big or small, restricted or IFA, advisers must unite

The smart, clean-cut and all-round respectable figure cut by the Personal Finance Society (PFS) chief executive might be an unlikely candidate for the latest populist uprising against elites. But comrade Keith Richards is taking a hammer to the body’s image as the preserve of only a certain type of adviser or firm.

Holding chartered status, as a firm or as an individual financial planner, has for years been the accolade to aim for. It is the badge of achievement most widely recognised by the public, and has historically allowed planners to stand out from their peers.

But Richards knows the chartered club, although aspirational, is only so big. The PFS needs to relate to advisers at every stage of their development.

The advisers’ code

With members working in a diverse array of roles, from client-facing to support, within firms that differ in shape and size, he knows the PFS must not be pigeonholed. This also goes for its attitudes towards independent and restricted advice, including the vertically integrated giants.

Nearly half of all advisers work for large firms, with the rest split between different layers of smaller businesses. The vast majority of firms offer independent advice, but the minority of restricted firms also tend to be the very largest. Restricted advice accounted for 36% of all advice firms’ revenues in 2017.

‘We do not try to create elitism,’ says Richards, ‘we encourage inclusivity’. The PFS recently appointed chief executive of restricted national firm Sanlam UK, John White, as president for 2019/20.

Richards said the best way for the PFS to drive up standards, and represent the profession to policymakers and the public, is representation from all forms of business.

‘It is really important our board is representative of that diverse market, that we have a measured mix and we demonstrate we are working as a united profession, not a fragmented and disparate one,’ he said.

‘Whether you are an IFA, a restricted adviser or a small or large firm, the fundamental unifier is we all have the same goal, which is to adhere to the same code of ethics.’

Great Advice, Great Profession

IFAs face a blizzard of regulatory changes and a period of unprecedented political and economic uncertainty. But Richards believes there is still lots of opportunity for the profession to thrive in difficult waters, providing it is willing to unite behind its merits and maintain the ear of policymakers and the public.

Richards took the helm of the professional body in 2013, shortly after the retail distribution review (RDR), and told New Model Adviser® he was proud of the progress the profession has made over the past six years.

‘Because of the makeup of the sector primarily being small firms, they often themselves underestimate how far they have come in a relatively short space of time,’ said Richards.

‘For me, the ongoing promotion, development and awareness of that is just as important internally as it is externally.’

The PFS has endorsed New Model Adviser®’s Great Advice, Great Profession initiative, which Richards hopes will help the sector to more confidently vocalise its progress in recent years.

‘Great Advice, Great Profession is something everyone I come across is proud to be part of, but they are not always as keen to be vocal about it,’ he said. ‘I think we should all be proud of how key a role financial planning plays in empowering people and changing lives for the good.’

Award winners at the PFS awards last year, including New Model Adviser® editor Will Robins picking yp the award for best financial trade publication. 

The PFS launched its first pay-to-attend event last year with Power Live, in the hope of engaging more IFAs in regional locations to share best practice. It is now planning to expand as a series of events around the country in 2019.

Richards said: ‘The feedback for the inaugural event was extremely positive. Generally, it will attract people who are really serious about financial planning and want to gain insights from others who have already adopted various planning methodologies. It demonstrates a bringing together of like-minded individuals.’

The PFS has seen increasing demand for soft skills training within its continuing professional development offerings, and will therefore be holding specialist events focused on ‘practitioner experience’ later in 2019.

PFS vs parliament

The PFS has been working behind the scenes to mitigate the negative impressions of advisers being cast into the public eye as seen, for example, with the British Steel Pension Scheme saga.

Richards explained: ‘British Steel is a good example of a minority of advisers who allegedly had been over-commercial tainting the reputation of all financial advisers. Especially when you have senior people on the [work and pensions] select committee likening advisers to vultures flying above the factory gates.

‘We challenged that. We wrote directly to the committee saying we felt that was unhelpful from a public interest perspective as it entirely distorted the landscape and the true picture. Indeed it brought into question the credibility of the government’s own pension freedoms.’

Richards stressed the importance of professional bodies acknowledging bad practice but working to restore balance to the narrative. The PFS meets regularly with the Treasury, Financial Conduct Authority (FCA), The Pensions Regulator and the Department for Work and Pensions.

He added: ‘It doesn’t take a lot to erode trust in the whole sector due to the actions of a few. But in the same way, if we come together as a majority, we are more likely to have a much more powerful influence on the way policymakers and the public see us collectively.’

Growing numbers

Rising professional indemnity (PI) cover costs in light of publicity surrounding defined benefit transfers are a hot topic for PFS members. Richards revealed many have contacted him to relay stories of their escalating premiums, or inability to get cover at all.

To address this, the PFS has established a ‘pensions advice taskforce’, bringing together all constituent parts of the pensions market, including PI insurers and consumer bodies.

Richards said: ‘We are producing a consumer guide to increase public awareness and ownership that links to a pension transfer guide. If we can get these right, PI insurers have stated they would feel more confident about the future market.

‘Policymakers are quite enthused the market is coming together to provide guides for the public, as the starting point for people who have never experienced advice is often one of scepticism.’

One suspected consequence of the regulatory fallout from pension transfer issues is a certain degree of consolidation in the market. Last autumn, 30% of advisers at the New Model Adviser® Retreat said they were hoping to sell up in the next five years.

But Richards believes the outlook is bright, arguing demand for advice is set to increase over the next 10 years. He said once advisers begin experiencing this, market confidence will grow.

He added: ‘We are seeing quite a big increase in taking on new talent and giving them a stake to continue the heritage of a firm within the region. I am not convinced we will see a massive outflow.

‘PFS membership continues to grow and now stands at over 40,000, over double the size of the pre-RDR prediction.’

Banks are back

The majority of PFS members are small IFA firms, a demographic that may be construed as under threat, as banks and asset management firms continue to bolster their advice artilleries.

Richards said this presents smaller firms with a unique opportunity, based on their relationship-building capabilities and ability to quantify value by helping to establish loyal client books.

He said: ‘For many established small advice firms, any new routes to increase consumer engagement in financial planning is likely to create opportunity. The banks already have client relationships.

‘But encouraging more people into financial planning to meet future goals often means that, as people build up wealth, they’re quite attracted to moving into a more personalised service.’

The PFS has expanded on its established Armed Forces MoneyPlan programme, in which it provides pro bono advice to combat veterans, in partnering with the Armed Forces Pension Scheme.

Richards revealed there has already been a ‘massive increase’ in inbound requests from armed forces veterans and their families. The body’s work with military charities includes the On Course Foundation and Blesma, both of which aid in the rehabilitation of veterans with lost limbs or life-changing injuries.

Richards said the prospect of working with Armed Forces Pension Scheme members has already drawn ‘huge enthusiasm’ from the PFS membership.

Bad habits

In terms of its advocacy for IFAs in the coming year, Richards has plans to visit the FCA imminently to discuss a host of regulatory reforms.

He said: ‘We will continue to encourage engagement from the regulator on a good practice basis, rather than knee-jerking back into the draconian Financial Services Authority form of regulation.

‘The FCA has made some good strides, but we need to carry on working with it to ensure the regulator does not fall back into its old ways due to a bit of political pressure.’

The PFS has also established a contingency plan for Brexit by engaging with the European Financial Planning Association (EFPA).

Richards added: ‘We are very confident that, should our union with Europe fragment, the financial planning community will keep that union alive for the greater good of the public.

‘That is taking us further into discussions with European regulators because we are now registered as an EFPA member, and all of our members can now carry European qualifications. That was extremely well received.’

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3 Comments Active Wealth (UK) collapse leaves £500k PI mystery

Active Wealth (UK) collapse leaves £500k PI mystery

Our investigation into the collapse of a firm at the centre of the British Steel pension transfer scandal reveals significant holes in the professional indemnity insurance system.


3 Comments Active Wealth (UK) collapse leaves £500k PI mystery

Active Wealth (UK) collapse leaves £500k PI mystery

Our investigation into the collapse of a firm at the centre of the British Steel pension transfer scandal reveals significant holes in the professional indemnity insurance system.