In his final message as CEO, Keith Richards reflects on the progress of the financial advice profession
In 2013, when I became the CEO of the PFS, many people thought that face-to-face financial advice was in sharp decline. One report warned, “an end to the IFA ‘cottage industry’ is nigh”, saying that a quarter of advice firms would disappear with the introduction of the retail distribution review. Another report predicted: “Millions of people, unable or unwilling to afford fees for advice, will go it alone and use internet-based ‘execution-only’ services rather than financial advisers.”
As it turns out, advisers have gone from strength to strength, with the number of advisers increasing, not decreasing between 2012 and 2020. Not only have advisers survived, they have thrived – according to the Financial Conduct Authority (FCA), the average earnings per adviser increased by 21% between 2016 and 2020.
This commercial success has been built on high-quality service and sound recommendations. The FCA has acknowledged the quality of the suitability-of-investment advisers and its most recent report said “consumer research shows that advised consumers think advice provides value for money”, adding that trust in advisers has increased since 2017, while complaints to the Financial Ombudsman Service about advice fell by a quarter between 2016/2017 and 2019/2020.
Our sector has graduated in the past 12 years – from an industry that many thought would wither away – into a profession that is the envy of financial planners across the world
I see this dedication to quality whenever I meet advisers, in the way they take up the challenge of pro bono work, the way advisers have championed causes like coverage for people with mental health conditions in the protection market and the way financial planning professionals have been ahead of anyone else in flagging risks like unauthorised investment funds.
When I travel outside the UK, financial professionals always ask me how UK advisers have managed to succeed in a market without commission and with so many regulatory demands. The answer is always simple – where advisers have won the trust of their clients, it is almost impossible for anyone to break that bond.
The best part of my job is always meeting our members and finding out about the ways they are changing their business to serve their clients ever more effectively. I am very proud of the space the PFS has created for its members to exchange ideas and good practice. The Festival of Financial Planning was a real high point in bringing people together and helped us to present the advice profession in its true light – as a community of highly skilled and motivated people who are there to make their clients’ lives better and who can really enjoy their work along the way.
There is still work for us to do – in making sure that pension schemes provide information faster to their members when they have important decisions to make about their retirement planning and, of course, in making sure regulatory costs are less unpredictable and onerous for smaller firms. The PFS will also continue to campaign for better results for the public, both in terms of access to information and access to advice.
Every year, it is wonderful to see new graduates come through and there is no doubt that our profession has grown to include a much more diverse range of people than ever before – reflecting the wider needs of the investing public. In a way, our own sector has graduated in the past 12 years – from an industry that many thought would wither away, into a profession that is the envy of financial planners across the world.
With all the challenges of an ageing society, a public sector that has just taken on a huge slice of debt, and clients who have far more choices around their finances than ever before, it is a profession that must – and I am certain will – play a huge role in the happiness and prosperity of our country for decades to come.
Keith Richards is CEO of the Personal Finance Society
Image credit | Luke Waller
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