When the Financial Conduct Authority-mandated professional standards reforms for UK advisers kicked in in 2013, Citrus Financial managing director and principal financial adviser David Braithwaite considered leaving the industry.
The amount of work involved, coupled with the fact that he didn’t do too well in school and “hated exams,” made him extremely wary about keeping up with the FCA’s new regime. Plus, there was the issue of being told what to do – a resentment he believes resonates a lot with Australian advisers now contending with FASEA.
“Frankly,” he says, “I don’t think a problem with the idea of having standards raised. What they don’t like is being told what to do with their own business. And if they’ve been trading for years and haven’t had any complaints, running a tight practice and doing everything right by their clients, there’s a definite resentment when someone else you can’t control comes in and says it’s not good enough.”
He thinks that feeling can be distinguished from the idea of wanting to be “more professional,” a desire many advisers share.
“It’s just the fact that you’re forced,” he says. “If you had some situation where it was, ‘Well, you can call yourself an adviser but if you want to sit this higher level of qualification, you can be this,’ they probably would do it given the choice. But being told to do it is a different matter.”
Braithwaite describes the decision to stay the course as “hard work,” especially since going back to school seemed like looking in the rearview mirror. On top of this, unlike in Australia, the commissions ban and the professional standards reforms kicked in at the same time. “I’m sure Australian advisers can relate to this,” he says. “There’s a sense of, ‘Now it’s another thing. When’s it going to end? When are you going to leave us alone and get on with it?’”
Compounding this was the fact that, unlike in Australia, real estate agents don’t need to be qualified and licensed in the UK. “That was frustrating,” he says, “because that’s probably the largest purchase anyone will make. So you had advisers thinking, ‘If I’m going to just sell a five-dollar-a-month term policy, I still have to do all this.’
“It seemed inequitable with the level of knowledge you have to have to do something quite simple. I get it.”
There was, however, a silver lining. Once the standards came in, a few things happened – first, as expected, a certain number of advisers did leave the industry. Because of this, though, the market share for the remaining advisers increased – and on top of that, there was a general uptake in advice in the general population.
“The reason for this,” Braithwaite explains, “stemmed from the fact that in the UK the people who complained the most about advice were complaining about advice they received from a bank. And banks didn’t want to pay for people to go through all the education requirements, so they just withdrew from advice.
“But then you had all these lost souls who were flogged a product, which was in some cases out-of-date and too expensive, and they’d come to an adviser and say, ‘We don’t know what to do with this. We’ve been paying for it for years. Can you help with this?’”
Braithwaite says it was then up to the remaining advisers to “provide that second opinion service. We’d say, ‘That needs changing. That could be updated. Have you thought about doing this instead?’ It was like going from black-and-white to full-colour HD.”
This development also allowed Braithwaite to provide more bespoke services. “Because we were now exclusively paid to sit down with a client, I didn’t even have to sell them anything. Just because you’re an adviser doesn’t mean you need to advise on products.”
To illustrate, Braithwaite highlights a client whom he describes as a “famous TV personality who hates everything to do with money.” Braithwaite’s service to her involves being paid a quarterly retainer to go to her house, open up her post, go through her bills and check her bank statements.
“In the old world,” he says, “we couldn’t do something like that, but now we can because that’s what she wants and she’s willing to pay for it.”
He adds that even though he’s definitely in the “new world” now, there’s value that older advisers bring to the table that younger cohorts may have yet to develop. “What’s lost in discussions about professional standards,” he says, “is that you still need, for lack of a better term, those old-school sales techniques. It’s all well and good having an exam and a qualification, but you still need to be able to talk to people. To build relationships and get people to open up.”
Given all of this, Braithwaite has some words of wisdom for those advisers considering their options regarding FASEA: “It might be the right time for you to exit, but if you’re saying, find your mojo. It feels like we’ve been pounded a lot and everything you open is bad news, so go out and make the good news. Get better qualified, because you’ll get better clients, develop more expertise and be able to explain complex things more simply.”
He adds: “Find your niche. You’ve gone this far – it’s going to be hard, but we’re all doing the same thing and we’re all on a level playing field. People will leave, but when the tide goes out the people who are left will thrive.”
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