FECIF - The European Federation of Financial Advisers and Financial Intermediaries

Editorial - June 2022

Paul StanfieldPaul Stanfield
FECIF Secretary General

The next 10 years

I recently came across an article that I wrote in December 2015 and immediately wondered whether what I had written had come to pass, in any way, shape or form. Without wanting to sound immodest, my predictions appear to have been fairly accurate and in a shorter timescale – but I am repeating them here not as a means of patting myself on the back but as a way of trying to foresee what the next 10 years may hold….

I wrote then that: “The last decade has seen quite dramatic changes in our industry, not least with regards to the advisory sector itself, but it won’t surprise me if the next 10 years see even more significant developments, particularly across Europe, mostly brought about, or at least exacerbated, by regulatory change.

It seems to me that this was pretty much true - and possibly remains highly likely for the next 10 years too!

I suggested that: “Whilst many people focus on the fee versus commission debate, I often feel that we are in danger of underestimating the incredible importance that the forthcoming remuneration transparency embodies. The UK’s RDR - the recent regulatory upheaval that, amongst other things, banned commission and created a fee-only environment for investment and pension advice - is often seen as the blueprint for the future elsewhere. Personally, I wonder whether we should more closely analyse commission disclosure in the UK, which happened way back in the mid-1990s, mainly as many of the forthcoming major changes across Europe involve similar transparency, rather than the creation of a fee-only environment.”

Transparency, rather than a move to fees, is very much where we are today in much of Europe – but will that be the case in another 10 years? I honestly feel that this is in our own hands. If we show regulators that we can act objectively, with the client’s best interests always at the core, then there should be no need for a move to fee-only environments. However, if we don’t…

Perhaps somewhat too strongly, I also argued that: “For too long it has been ridiculously easy to call oneself a “Financial Adviser” in many European jurisdictions. Even those countries with greater regulatory structure insist on what, to my Anglo-Saxon mind, appears to be a very modest level of “provable” expertise. Statutory qualifications and CPD will become a requirement across the whole of the EU in the next few years and, whilst initial levels will not be extensively demanding, this will sort much of the wheat from the chaff.”

Whilst my words may have upset some people at that time, the increases in knowledge and expertise, which have become a regulatory necessity for financial advisers and intermediaries across Europe in the intervening years, have led, in my opinion, to considerably greater levels of professionalism and expertise. This can only be a good thing – but let’s not forget that professional development is an ongoing thing, it has no finite end…..

Business Models
I also suggested that: “Increased and certified expertise allied to remuneration transparency will change business models – there is no doubt in my mind at all about this fact. In simple terms we will see, in many cases, reductions in initial commissions and greater focus on ongoing remuneration, in various manners.”

Quite clearly this has happened or is happening in many European markets. Once again, it is leading to better, more client-focused advice – and better businesses!

My final comments in the article from late 2015 were: “We are heading for significant change. Those that adapt may well thrive. Those that do not will no doubt disappear. Perhaps that is the most relevant lesson to learn from the UK?”

I think I’m going to stand by that conclusion too – for the last 7 years and the next 10!

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