Retail Distribution Review

Written evidence submitted by Jim Smith, Financial Planning Consultant

I refer to the above and want to make the following submission to the Committee dealing with the Retail Distribution Review:

a. I am the founder and Practice Principal of a firm started 25 years ago.

b. I agree that raising standards and competence is long overdue and is essential. (It has however, taken the regulator over 22 years to identify that. The term ‘Financial Adviser’ should effectively be ‘licensed’ by qualification).

c. The proposal to abolish commission funded advice and replace it with fee based (only) advice will segregate clients into two categories:

a. The few who can afford upfront fees (and ongoing review costs).

b. The many who can’t.

d. I have seen 22 years of ‘tinkering’ where one ‘academic concepts’ have resulted in successive changes of direction, and all at a huge cost to the industry and its clients.

I feel this will be yet another change which will need further ‘tinkering’ to resolve the externalities which will eventually be identified ‘long after the event’.

The main problem is that the FSA take an ‘auditorial approach’ instead of a ‘hands on management approach’. They have failed to police the industry. ‘Prevention’ seems to be an alien concept.

e. I have developed a large successful Practice under the current commission based system.

The majority of our clients are not ‘ignorant or bewildered’ as the FSA has suggested.

We offer our clients a choice; commission, fee or combination of both. This allows clients to minimise the cost and or to suit their finances and requirements.

The key to our success is recurring business which I feel reflects the standard of service offered.

f. All this is going to do is restrict the choice of delivery and quality of advice available.

January 2011