Greetings from the Isle of Wight. The boss is apparently busy with other stuff (presumably organising our virtual office Christmas party [1] ) so for one week only I’m back in charge of the weekly update. Sitting comfortably? Then we shall begin.

It was a pretty full-on week last week, what with Parmenion, Nucleus, Transact and James Hay all announcing potential ownership changes/acquisition aspirations. Nucleus very helpfully/hilariously (delete as appropriate) made their announcement at the same time last week’s Update was sent out. You can read our initial reaction via this link right here.

Over the last week, both Aquiline Capital Partners and Allfunds politely made their excuses and pulled out of the running for Nucleus. Based on the conversations we’ve had with various private equity folk there is certainly a lot of interest in both Nucleus and Parmenion, and it feels like things are moving rapidly. There is also what appears to be something akin to an industry open secret regarding another platform changing hands, however until anything official is announced, and out of respect to the staff involved we’ll keep that to ourselves. Stay tuned though – there is a lot happening in platform land.

If that wasn’t enough excitement last week the FCA also published its evaluation of the impact of the RDR and FAMR. Twitter has recently implemented a new feature whereby, if you are commenting on an article/link you haven’t clicked on, it asks you if you’d like to read it first before tweeting. In unrelated news, the adviser trade press rapidly hit over 100 comments on one of the reaction pieces.

This paper is a reminder, if needed, that the FCA has a wider remit than just regulating the financial advice sector. Having spent some time reading the whole paper & digesting the various responses, I think there are two main issues emerging.

Firstly, within the advice sector, whilst there are some areas of concern, “the advice market is moving in the right direction”. The FCA is starting to flare its nostrils at ongoing adviser charging, and price clustering of ongoing fees, but I’m not convinced this is a major issue. It’s more a reflection that advisers are increasingly focussed on only serving clients who both want and need ongoing advice. If, as an individual, you fall into this client segment, great. But if you don’t, your options are limited.

If I’m right, and advisers have followed the PROD rules, documenting the needs of their target clients and the services that best meet these needs, then assuming individual client suitability is achieved there are no issues. It’s either suitable, or it’s not, and if it’s unsuitable the FCA’s supervision team should be taking an interest.

More importantly, I think the FCA agrees. At the start of this year, before things went horribly wrong, they were conducting research with adviser firms under the banner of “Assessing Suitability 2”. A freedom of information response shows that, by early March, they had sent the information request to 125 advice firms and had received the information they had requested. Fast forward to December, and this work has now been put on hold indefinitely. Last week’s paper is raising some concerns, but if the FCA had found any significant issues with these 125 firms, it’s hard to believe this supervision work would stop.

The second issue with the RDR review is one of competition. Sadly, only 4.1 million individuals received advice in 2019. The FCA not only has a responsibility to supervise and regulate the markets they are responsible for, it also carries a competition remit. This is where I think the change needs to happen – it needs to be easier for firms to offer advice at a lower cost, and for new firms to enter and innovate the market. This is a problem for the regulator: advisers are not paid to deliver social policy, the regulator is. The existing advice sector can carry on serving the segment of clients you are serving. The regulator needs to make the benefits of advice more accessible to all.

MIKE’S HOUSE OF LINKS

    • It’s the last #HomeGames of the year, and it’s our round up of 2020. It will be much better than it sounds, not least since Mark & Steve will be joined by some special surprise guests. Watch it at 12:30 here, or like and subscribe via our Youtube channel here. You can also catch last week’s effort, featuring the mighty Justin Cash. This was a good one.
    • Friend of the lang cat, former #HomeGames guest and all-round nice guy Adrian Murphy is running 5k every day in December to raise money for MND. Clearly insane, not least since he is doing the running in Scotland, but a fantastic cause. If you can spare a few quid, please help him hit his target.
    • We are very happy to say that Fusion Wealth will be live on Platform Analyser sometime in the next 24 hours – perhaps even today if testing is all OK. It was one of the specialist platforms we really wanted to get live, and we’re chuffed to have them. Fusion will appear on both the limited free version and the full premium versions of Analyser.
    • The boss will be back next week, and there is a real danger he might do his end of year albums round up before the year is out. Striking the first blow, here is my choice. Sault have been a real bright spot in an otherwise terrible year. They are anonymous, their social media presence is virtually non-existent, but their output has been incredible. Two amazing albums in the space of a couple of months during the summer – untitled (black is) and then untitled (rise). Both should be number 1 and 2 in any best of 2020 list and are well worth a listen. I’ve gone for Scary Times, from the untitled (rise) album – enjoy.

Until next time, Merry Christmas from the Isle of Wight

Mike

[1]: #thingsthelangcatwouldneverdo