Valuing fees: coffee with a twist

Our observation in Anticipating the Retail Distribution Review that the business model for financial advice will not change unless and until customers learn the value of paying fees for a professional and independent service was echoed in an article in the Observer yesterday by Heather Connon

Barclays Bank to take over trust-based financial planning – oh yes?

Barclays Bank has moved its tanks (a 900-strong regiment of ‘Financial Planning Managers’) onto the independent financial advisers’ lawn. Barclays’ National Sales Director has told an industry conference (PIMS) that it has the people, ‘sales training programme’, processes and ‘open-architecture’ products in place to dominate the IFAs’ high-net-worth client segment. Could this be the same Barclays Bank whose people and processes were secretly filmed by Channel 4, responding to deliberate management incentives to sell unwanted and poor-value services to anyone foolish enough to wander into a branch? See my post on the programme.

Anticipating the Retail Distribution Review

The Discussion Paper resulting from the FSA review of the failed business model for long-term savings in the UK will be presented by the FSA at a conference on 27th June. No Monkey Business Limited circulated this briefing to financial journalists, anticipating what it will say. Our advice: don’t expect any silver bullet – all [...]

Anticipating the Retail Distribution Review

Click here to download a pdf version of this paper.
Insights from a firm that knows about alternative (consumer-friendly) business models
Key points

The background to the RDR is economic. There is a ‘market failure’ in the distribution of long-term savings products (FSA, Treasury, HOC Treasury Committee, Myners, Sandler). Three aspects: i) the business model for firms involved [...]

Charges: wake up and smell the coffee

In the weekend FT Money Josephine Cumbo tells of a reader looking for an income drawdown manager ‘who was stunned to find that charges ranging from £74,000 to £115,000 would be deducted from his wife’s pension pot depending on whether annual returns of 5, 7 or 9% were achieved’. The pot was £154,000. The provider was St James’s Place Capital. Its quoted charge of 2.7% pa would absorb 38% of the mid-range return. It is also near enough 100% of the ‘risk premium’ relative to a risk-free investment strategy. Challenged to defend its charges, SJP claimed they were justified by access to top fund managers.