The chief executive of the Personal Finance Society (PFS) has said the evolution of the financial advice model towards planning and away from insurance sparked plans for it to open an Asia operation.
Keith Richards told International Adviser that, since the Chartered Insurance Institute (CII) was founded in 1912, the industry “has slowly grown from selling insurance products to savings products to investments”.
“It’s massively evolved now, where insurance is almost isolated to general insurance, and investments and savings are the domain of personal finance professionals,” he added.
“Internationally, we’ve been in the past mainly focused on insurance; whereas what we’re finding in various parts of the world is that there’s massive demand for financial planning, qualifications and ongoing CPD and good practice guides.
“Which, of course for the CII, fits within the domain of the PFS.
“We are planning to launch the PFS Asia and have already had significant engagement with the markets, who are keen to see the brand of personal finance emerge.
“That’s quite an exciting development for us because market growth in financial planning is arguably more significant than insurance.”
Implementing UK initiatives
The PFS is a UK-based concept, and therefore changes may have to be made to fit into the Asian financial advice market.
Richards added: “I think the markets are dynamically different, there is a lot of interest in the way that the UK has evolved its model.
“And, in particular, I get a lot of engagement about how the UK has moved into a fee-based proposition service rather than commission product selling.
“Because obviously in many regions, as per the UK, the thought of commission bans would send markets into a spiral.
“There’s a lot of education to come from the UK, but it has to be applied based on the differences in each region.”
Regulatory concerns in Asia
So, what are some of the main issues that the PFS will have to contend with in Asia Pacific?
“There are concerns around remuneration bias, and there are concerns around incentives and rewards,” Richards said.
“They are topics that regulators tend to look at, on how they drive the behaviours of advisers and what that really means for consumers.
“They’re the core ones, outside of that, the regulators have got a more challenging task. In the UK, 30 years ago it was a very mature market and the decision to reform was accepted that it would have impact of consolidation.
“It was a deliberate decision for flight to quality, which actually would see consolidation across the market.
“In other parts of the world and, in particular Asia, the regulator has got a big challenge because governments want to see growth in both insurance and financial planning, while at the same time addressing potential poor outcomes for consumers.
“Protecting the public interest doesn’t just mean protect them from poor outcomes, because poor outcomes could be that they’ve got no access to advice, they don’t know what to do and then they’re left to fend for themselves.”
