Will the Lone Ranger ride again?

While pondering the question, I remembered a lame joke I heard many years ago. Tonto, the side-kick of the famous crime fighter of the Wild West, walks into the bank and asks to speak to the ‘Loan Arranger’.

Not too many young people will get this because it really belongs to an era long gone. In a similar vein, many experienced advisors battle to come to grips with changes in the industry. It borders on upheaval for some of them, to the extent that some suspect a conspiracy is afoot to get rid of them.

Those of us, who grew up in the era of rate books and manual calculations have indeed had to make substantial changes over the years. At least, at the outset, change occurred at a much slower rate than it does now.

While many embraced the advent of technology, and the advantages that came with it, the most significant challenge arose on 30 September 2004 when the FAIS Act heralded much stricter regulation than ever before.

A recent survey conducted amongst independent financial advisors revealed that more than half of the respondents spent roughly 30% of their time on compliance-related issues. The real question is, of course, how much of their time and money should be spent on compliance matters?

The past three years saw a reduction of roughly 2 000 FSB licences. Not all of those involved had left the industry. Some became tied agents, while others joined franchises.

The danger of this trend is the reduced availability of independent advice to consumers of financial products. The regulators continuously stress the importance of clients being placed in a position where they are able to make an informed decision. A choice of one does not really achieve this, does it?

Part of the new regulations, effective from January this year in the UK, requires that advisors clearly indicate the status of their advice. A recent document from the FSB explains what is influencing their thinking in this regard: "…advisers will only be able to describe themselves as 'independent' if they undertake a comprehensive and fair analysis of the relevant market. If firms are not 'independent', they will be required to make it clear to the customer that they are offering 'restricted advice', and be clear about the restrictions that apply (e.g. if they only offer advice on a particular type of product, or only offer products from one, or a limited range of product providers).”

The second aspect of the current review entitled ‘Intermediary services and related remuneration’ concerns the implementation of fees, rather than commission, where investment-related business is concluded. This is not as bad as it sounds, nor is it an immediate threat.

Implementation will be phased in over time, and there are various options being considered. Whilst not quite 50 shades of grey, a more transparent version of the current arrangement is envisaged, whereby the product provider, on instruction from the client, can pay over the fees as agreed.

Will the Lone Ranger still be riding, five years from now? The answer depends on the correct application of available resources.

The Lone Ranger did not do it alone. He had Tonto and his horse, Silver, to help him. And he used only silver bullets, which are rumoured to be highly effective against werewolves, witches or other monsters.

Finding the right support measures will be the key to success in the years ahead. The days of doing it on your own are, unfortunately, probably long over.