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QUESTION: I need to upgrade my qualifications, following the RDR report that came out last week, what’s the best way of making sure I’m up to speed? Should I wait for the new qualifications to come out first?

ANSWER: You are right to be thinking about starting to upgrade your qualifications now.

Those who delay should be warned that they will be putting themselves under even greater pressure to get through the exams before the 2012 deadline.

Aware that many advisors will already be studying towards Level 4 qualifications, and that many more will seek to update their qualifications over the coming years, the FSA has committed to a ‘no regrets’ policy.

This means that anyone holding or studying for a Level 4 qualification before the new standards are available next year will be able to fill any gaps in content between the existing Level 4 and the new exams with continuing professional development (CPD).

This means that any advisers who wish to start updating their skills now can do so.

- Anne Kiem is director of further education at the ifs School of Finance

When most people think of a financial adviser, they think of ‘the man from the Pru’: early fifties, grey suit and a briefcase. Older clients trust this image and accept the man as a person to give them prudent financial advice.

However, financial services is a fast-moving industry. A new generation of clients who really need advice are out there, but the longevity graph from the 55-year-old in the suit is really not going to inspire long-term saving for retirement from someone in their twenties or thirties.

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I presume that I am not alone in thinking that given the weight the FSA put on Key Features Documents these would be a reasonable place to contain all information relevant to consumers when they are looking to get an understanding of how their product works and the charges and terms of their contract.

Many companies these days offer pension contracts that have the ability to create an establishment charge over a given period to cover the commission paid to the adviser.

One such product is the Axa Personal Pension contract.

Axa call this the “Monthly Set-up Charge”, and in the Key Features Document this charge is described with the following statement: “We make a charge to cover the cost of commission paid to your adviser. We do this by taking away units for the next xx years.”

All seems perfectly fair and quite clear at this point. That is until the client transfers away and actually incurs this charge.

If a client transfers away, for any reason within the clawback period, not only will AXA charge the client the outstanding monthly set-up charge but they will also clawback the commission from the adviser.

Similar contracts such as Standard’s SIPP and Aegon’s Flexible Pension Plan will claw the outstanding amount back from the client but not then also claw it back from the adviser.

I queried this with Axa and was told initially that the set-up charge covers the distribution costs, this includes the commission paid to the adviser.

If this is genuinely the case then why does the Key Features Document state that it’s cover the cost of the commission not distribution?

In a statement to me Axa have said “we must have mechanisms to protect AXA as well as the consumer and the Adviser and that they are clearly explained in our documentation”.

AXA have created a contract that could mean that a sum of say £5,000 is paid to the adviser, the client transfers out and incurs the outstanding charge which could, for example, equal £4,500 and the adviser has the whole £5,000 clawed back.

I can see how a gain of £9,500 could quite easily protect AXA – what I’m not so clear on is how this protects the adviser or the client?

Unfortunately when I asked Axa to expand on it they declined, so make of that what you will.

In a climate of treating customers fairly I think it is, at best, disingenuous to suggest in a key features document that the charge covers the cost of commission paid when this has been clawed back.

Thankfully though in my discussion with AXA they asserted that most advisers will be aware of this and they feel it is “fair and reasonable” so it must just be me.

- Kelvin Lillywhite is a financial consultant at Albany Financial Consultants

AXA LIFE’S RESPONSE:

“Whilst we understand that the IFA has raised concerns about two specific clients cases which may be affected by AXA’s decision, we believe that the charges applied to be fair and reasonable in so far as we must have mechanisms to protect AXA as well as the consumer and the Adviser and that they are clearly explained in our documentation and illustrations.”

The RDR report – the one which says ‘This is really what is happening’ – has finally landed. While the full remit, and repercussions are being discussed elsewhere on the site – an initial look at it makes interesting reading.

There is much to digest – not least on commission, a professional ethics board, and qualifications – but perhaps the most crucial part of it goes to the very heart of what it is to be a financial adviser.

How independent are you? The paper says there will be two categories: independent and restricted advice. If an adviser has a restricted number of companies it can recommend products for, then it will have to say so in discussion with the client and then in writing. This is whether the adviser works for a bank, or a multi-tie operation.

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Most of us, from time to time I’m sure, must wonder what the Dickens is going on in this country.

Well, forget Dickens, it’s more like one of Shakespeare’s tragedies. Or is it a comedy?

Aside from the insane political correctness that seems to pervade every facet of modern day life in the 21st century we have been subjected to the shenanigans of the MP’s, the banking bandits and, last but not least, the FSA’s dogma.

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Dual pricing to the detriment of mortgage advisers first hit the headlines early last year. Lenders were swift to say they still supported independent intermediaries and their pricing policy was not a conspiracy but 18 months on and dual pricing still continues.

To try to push the dual pricing debate forward Legal & General Mortgage Club has conducted a poll and asked its members to identify the best solutions available to lenders when credit is restricted.

The vast majority said if lenders wanted to prove they supported independent advice then they should raise their pricing across all channels.

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Intermediaries have been hitting the headlines today for getting into trouble with the authorities.

Not so much the FSA for a change, but rather the police and the Serious Fraud Office.

Eleven people, including some IFAs, were arrested yesterday in the North West and Midlands because of alleged links to a £2.5m suspected tax relief fraud that is believed to involve bogus pension schemes.

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The financial advice industry appears more suited to the older worker, or at least that is what I am often told when talking to people seeking or giving financial advice.

On the face of it this seems a very plausible assumption, as one would assume older advisers have more experience.

In other industries, professionals are reaching the high points of their careers at younger ages than in the past: hospital consultants are a case in point and policemen and women look so much younger than before.

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Last night was the FTAdviser Online Service Awards – a night held to celebrate excellence in the level of online service being provided to advisers by the big players in the financial services industry.

The evening got off to a fiery start when the fire alarm went off and we all had to evacuate the building for a short stint. Rumour has it, this was part of comedian John Bishop’s act, who hosted the proceedings. Though, I can’t be sure.

Although the ‘five star’ awards were given to those companies which have provided the very highest level of online service to intermediaries, there were obviously a lot of providers who didn’t make it into the award winning categories at all – and this brings me to my point. Read More »

Chancellor Alistair Darling has been bold in claiming that banking regulation cannot be blamed for causing the financial crisis and, it follows, there is therefore no need for extensive regulatory reforms.

Although Mr Darling has enough on his plate battling against his neighbour at Number 10 and the ambitions of his Cabinet colleague Ed Balls, it looks as if his lack of focus on what happened leading up to the August 2007 collapse of Northern Rock, the middle sized regional mortgage bank, calls for a reminder.

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On Sunday afternoon strolling through Clapham in London, I stopped and looked at a few estate agent windows to see if property prices had yet fallen low enough to allow me to buy.

After writing about the fall in property prices for the last 18 months, I was hoping to see a few houses jump out at me with the right price tag, or at least a price tag that I could get a mortgage for.

I was bitterly disappointed though, as there was not even one property in my price range.

In fact, I think some part of me was also a little surprised at how expensive property prices still are. Read More »

At the time I was writing this column, the High Court had still not announced its decision in the FSA vs ICO case regarding the principle of confidentiality and the naming of the Lautro offices. The decision is now six weeks overdue, giving some idea, perhaps, of the importance of the outcome.

But whatever the outcome, the FSA has stated that it intends to take the case to the next stage if it loses this round, and I suspect the ICO will do likewise. Apart from the fact that this whole situation has escalated out of all proportion, it may well yet be overtaken by events before it is finally concluded.

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QUESTION: I have started to see business pick up, particularly on the mortgage side. How do I know if this is a real recovery, or is it just a blip?

ANSWER: Unfortunately the answer is we don’t know if it is a full recovery or not, but I would doubt it.

Recent reports and statistics suggest there has been a turn around in the mortgage market with more loans being agreed and estate agents getting busier with enquiries.

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Our profession is dominated by advisers with years of experience. While this is a real strength, the lack of new people joining our profession is a concern.

These new people might be graduates, but could also include ‘return-to-workers’ and ‘career-changers’. There are many reasons for this lack of ‘new blood’. One of the most obvious is the loss of what was once the natural breeding ground for IFAs, tied salesforces.

Putting the rights and wrongs of tied salesforces to one side, there were definitely some advantages to that career path in terms of support with examinations, skills-based training and coaching – all whilst being paid a salary.

It is therefore more important than ever for us to work together to attract, train and develop new advisers. Firms who have recruited and trained their own advisers often tell us this produces better results than those advisers they bring in with existing experience.

However, to attract the right sort of recruit you need to be aware of what they want: structure, security and a clear idea of what their career progression will look like.

For small firms, there are many challenges when recruiting inexperienced people into adviser roles:

- Salary costs for somebody not able to generate revenue for the business.

- The time and skills necessary to provide coaching, mentoring and supervision. On the one hand, this is the time lost by a productive adviser who is not generating revenue, but it also includes an assessment of the skills available within a business to help properly support the new recruit.

- The final challenge is also aligned to time and money, with new recruits likely to need significant support to achieve the ‘certificate’ level qualifications.

There is no easy solution – investing in people costs money. However, what is important is to maximise the benefit of that extra person, for example, by involving new recruits in administration, paraplanning or other support activities.

This can form an important part of their training and might also free up time for the experienced and active adviser. After all, any increase in productivity from existing advisers can help to offset the salary costs for the new recruit.

Fortunately, there is now more support available from organisations such as the Financial Services Skills Council and the National Skills Academy for Financial Services. This support can help employers provide a structured training programme to enable new recruits to develop their knowledge and skills.

Furthermore, it is relatively straightforward to gain authorisation to give advice in some product areas, such as general insurance, so the new recruit may be able to start generating revenue quicker than you think.

Whilst these apprenticeships might not replace the historical tied salesforce route, it is certainly a valuable starting point for a marketplace dominated by small and medium-sized firms.

- Nick Kelly is managing director of network and direct at Sesame

* If you have any views on this post, please let us and your fellow readers know below. If you wish to write a Young Adviser post for us, please contact Rob Langston at rob.langston@ft.com

Many pundits are predicting the green shoots of recovery in the economy with house prices showing signs of stabilising, yet we are also being presented with projections showing that unemployment will continue to rise and reach 3 million.

This paradoxical uncertainty, coupled with the turbulence in financial circles over the last year or so, presents an opportunity for financial planning to be taken more seriously.

Too few people plan their financial futures and there are many reasons for this. The Retail Distribution Review, inter alia, is aimed at addressing some of the causes of these reasons.

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The Lehman Brothers debacle isn’t even over yet – in fact it is far from over – yet already alarm bells of a new investor problem are ringing.

Keydata this week went into administration and had its permissions suspended by the FSA, with the regulator raising concerns about the firm’s financial position.

The administrators, PricewaterhouseCoopers, are seeking to identify a buyer for the firm buy the end of next week, but interested buyer Jubilee Financial Products yesterday told FTAdviser.com that this deadline could be “tight”.

Other front runners had included Meteor and NDFA, but only moments ago NDFA said it had withdrawn from the race to acquire Keydata’s assets.

Keydata are keeping quiet as to who the 30-strong list of interested parties are – as are the interested parties themselves – as they are bound by non-disclosure agreements. But it is clear that many more revelations surrounding the collapse of this company are still likely to emerge.

Structured products – favoured by some IFAs, loathed by others – have had a bad run in the credit crisis, namely since the collapse of Lehman Brothers last year, with investors yet to have received compensation for their claims of mis-selling and many yet to lodge their complaints with the FOS.

With so many action groups springing up across the UK – namely, Spirit (for Lehman Brothers investors), the Northern Rock Shareholders Action Group, the Bradford & Bingley Shareholders Action Group and the Norwich Union Policyholder Action Group, to name just a few – the question has to be raised as to whether Keydata will also be a long running consumer fight with another investor action group to emerge.

PwC may be trying to wrap up a sale of the company as soon as possible, but for investors a longer wait is likely for the situation to be resolved.

Undoubtedly questions will be raised about the sale of the products and if they were mis-sold to investors. It could mean that investors should brace themselves for another battle.

Here’s a dilemma. Unemployment is still soaring ahead, house prices are still bumping along the bottom and commentators are bemoaning “disappointing” earnings from some of our biggest companies.

But still the markets are rising. How can this be?

Well, it’s simple. Regardless of the embarrassing kerfuffles which our politicians insist on getting into and regardless of the unsavoury mire that banks and financial services are still wading through, the markets, like Ol’ Man River, just keep rolling along.

What a lot of people seem to struggle to fully comprehend is that markets do not reflect current states of affairs, but they look ahead to anticipate future peaks and trough and adjust positions accordingly.

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Since 1998, a year after Labour came to power, there have been 10 pensions ministers and since the Department for Work and Pensions was created in 2001 there have been eight cabinet members given this portfolio.

This highlights that in a department whose actions affect most taxpayers, the government appears to have taken its eye off the ball.

If the government wants taxpayers to start taking more responsibility for their own long term futures, as people live longer and more final salary pension schemes close in the private sector the government should put all its best resources into this brief.

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One of the things HBoS did so well was ensuring IFAs knew which brand to go for to meet the needs of all of their customers.

Savvy savers were pointed in the direction of Intelligent Finance, buy-to-let investors were pushed towards BM Solutions and so on.

When it was rescued by Lloyds it was inevitable that some of its intermediary mortgage brands would have to go.

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QUESTION: I’m thinking of selling my business. How should I go about valuing it, and finding a suitable buyer?

ANSWER: Any business, particularly an IFA practice, is ultimately worth what someone will pay for it.

It is also an absolute truth that the key to realising the full value of your business is to gain exposure to a good number of qualified buyers who posses both affordability and a tangible need or benefit to be gained from acquiring your business.

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Are there lessons to be learned from the appointment of Yasmina Siadatan as Alan Sugar’s next apprentice for young advisers?

Siadatan was restaurateur of a successful restaurant she set up with her brother and a loan from her mother. She demonstrated experience and business acumen some of her younger (and older) competitors didn’t possess.

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Back in October 2008 in an interview with the Financial Times, FSA Chairman Lord Turner, implied that intermediaries had been paying too much in regulatory fees, especially in relation to the levels of risk they posed to the economy when compared to larger institutions.

This issue once again came to the fore in February when FSA published their proposed regulatory fees and levies for 2009/10, proposals which saw intermediaries fees increase dramatically without justification.

In response, the Association of Independent Financial Advisers (Aifa) and the Association of Mortgage Intermediaries (AMI) launched a highly publicised ‘fees campaign’, urging those in the profession to unite with one voice and respond to the FSA’s proposals.

We assembled and coordinated a fees strategy group to ensure members were fully informed of all the issues, to develop strong workable solutions and to mobilise grass-roots support. We also sent correspondence to hundreds of firms asking them to respond to the FSA’s fees consultation paper.

Not only did the profession respond but they responded in force – an impressive 533 responses to be exact.

On the political side of things we engaged in a highly constructive dialogue with HM Treasury, as well as meeting with civil servants and politicians from across the spectrum to outline our concerns.

Additionally Aifa’s chairman the Rt Hon John Gummer MP personally intervened on the matter due to his strength of feeling that fees needed to be reduced.

We also met with senior FSA staff to voice the distress of the profession, and embarked on a significant media programme to highlight the issues raised.

We were therefore delighted that FSA took note of our campaign and lobbying and this week reduced the level of fees payable by IFAs and mortgage advisers by £11.7m compared to the initial February proposals.

The increase in fees for IFA’s, which were slated to rise by 15 per cent, will now increase by just 4.8 per cent.

Mortgage brokers will only see a 2.7 per cent hike, compared to the original proposed increase of 21.2 per cent.

And for firms with general insurance exposure, fees will increase by 9 per cent compared to the proposed 19.8 per cent increase.

The FSA says once the financial penalty rebate is applied, approximately 10,000 of the smallest firms will see a fee reduction compared to the previous year.

This is an appropriate and welcome measure in difficult economic times. Aifa and AMI strongly believe that regulatory resources, and therefore costs, should be focused on those firms that require increased supervision and not those in the IFA and mortgage advice professions.

This announcement also shows the power of constructive lobbying and it is testament to the whole profession that uniting with one single voice on such a key issue has resulted in such a positive outcome, providing significant savings for firms.

Finally I want to echo John Gummer’s sentiments in thanking FSA for their bravery in changing their minds on such a key issue.

Aifa and AMI continue to work with FSA on their wider funding review, and we look forward to further discussions with them over the coming year.

- Chris Cummings, director general, Aifa

The FSA has given IFAs until August to disclose non-monetary benefits they receive to clients in our initial disclosure documents/terms of business.

Examples include free or discounted software, free or discounted training, and/or free or discounted marketing.

IFAs are to say that the product costs will reflect the cost to the provider of giving these additional services and list the providers concerned, also stating that further information is available upon request.

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It perhaps should not come as any surprise that major providers are adopting a wait and see approach to pension reform.

A huge amount of money is at stake, whether it means tinkering with existing pension regulations or bringing in a completely new system for the low paid.

The problem is that the momentum over a potential change in government is building into an almost unstoppable juggernaut.

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QUESTION: My managing director is putting pressure on me to keep up sales, particularly on pension transfers, but my compliance director is not letting them through.

What are the implications of not obeying the compliance director?

ANSWER: Yours is a classic situation found in many firms where sales and compliance do not always operate on the same wavelength.

The answer, given that I don’t know why your compliance director is apparently blocking your business flow, is to ask why.

Is the quality of the advice and information recommending the pension transfer insufficient to satisfy your compliance director? Or is there a more far reaching reason?

The cost and risk implications on you and your firm are sizable if your actions and advice do not meet the requirements.

The pressure from your managing director may seem strongest, but does he really want to be paying out large funds in compensation.

So better to upset him than your compliance director who is most likely protecting the firm and its advisers.

- Bill Warren, managing director, Bill Warren Compliance