I have always thought that the opening line from LP Hartley’s 1953 novel The Go-Between is a great statement, simply said and very true: “The past is a foreign country; they do things differently there.” Conventions on what is acceptable in terms of attitudes or behaviours change so radically over time as to make them seem foreign.
This will be equally true when we look back at our industry in years to come and compare acceptable advice now to what will be acceptable soon. I have no doubt that adviser business models and behaviours will have changed radically.
Having run a UK and international wrap platform for the past five years, one thing is clear to me: the increasing expansion of financial regulation around the globe will demand from our industry greater professionalism, greater transparency, fewer conflicts of interest and, ultimately, better outcomes for clients.
Momentum grows
We have seen this in Australia and the UK, and we are now seeing it in more jurisdictions as regulatory momentum grows.
The owner of a large adviser firm in Dubai said to me that he was now increasingly looking over his shoulder to the ever-approaching tide of regulation. He was therefore considering what he should do to make his business ready to weather this change. In his view, making his business prepared now would give it a good chance to gain from the changes at the expense of those that were unprepared.
If we just take the regulatory changes that have been happening in Belgium, Holland, Denmark, Singapore and Hong Kong, it is clear that the world is changing.
In addition, we are also seeing regulatory authorities flexing their muscles elsewhere, for example the UAE and South Africa.
Missed opportunity
Regretfully, not all these regulatory changes have been for the better and they have also not been good for all consumers. The implementation of the retail distribution review (RDR) in the UK did not allow ‘grandfathering’ for older advisers to continue to practice.
Many good advisers with decades of experience decided to retire rather than to have to take exams to obtain the formal qualifications now necessary.
This was a big error by the then Financial Services Authority, as it resulted in a dramatic reduction in adviser numbers in the UK, falling by 23% from 40,000 at the end of 2011 to 31,000 by the start of 2013.
