In the Spotlight with Wendy Baker-Rees, Financial Advice Network

FR: How have recent changes to the industry affected the needs of intermediaries?

The recent regulatory changes, including the Retail Distribution Review and the Mortgage Market Review, mean that advisers now need to work harder, spend more time with their clients, ask more intrusive questions and require more paperwork than ever, all while still trying to maintain the consumers trust.

Clients now have access to more information than ever before about the industry, and there is still a distrust since the financial crisis, so they like to be completely sure that any advice they have been given comes from a solid knowledge base.

Because of this, there are now so many examining boards; many new starters are completely unsure where to start. The number of new financial advisers has fallen by 3340 since 2009, and the industry needs to work together to help remove barriers to our new entrants.

There have also been major technology changes over the past decade. Advisers can now speak to thousands of people at the touch of a button, but with this comes great responsibility and new Financial Conduct Authority regulations. We need to be encouraging young and tech savvy advisers, but guiding them as well.

FR: How important do you think the online experience is for intermediaries – do you think it is gaining significance in the industry?

Even our most technophobic advisers now look for an online application, as there is often a better rate of commission involved when working online, and it makes the process much quicker and easier. If providers and lenders haven’t got the ability to work online then I would suggest they might not last much longer in the industry.  

With straight through the line technology, efficiencies normally follow and these savings will hopefully be passed on to clients,although this doesn’t appear to have happened with the Mortgage Product fee, where even with straight through the line technology, fees can reach up to £2,000.

FR: How will technology affect the way advisers, lenders and clients do business?

We know that the speed of a decision is becoming more important, with people having instant access to all manor of things via their smartphones, tablets and computers. This could mean that things like instant plan decisions, or reliable online advice (or robo-advice as it is starting to be called) could really take off in the very near future.The millennial generation are well known for their time spent online (up to 18 hours a day in some cases) and this is going to impact how advisers and clients interact eventually. The MMR attempted to encourage the younger generation to spend more time face to face with an adviser when applying for a mortgage, but the popularity of robo advice means investment advice might have a different future altogether as people’s wants and needs are shaped by what they can access instantly.

The way an adviser collects information and makes recommendations could also be changing. Rather than the traditional face to face experience, clients could upload and share their information via a client portal, making the experience of applying for even a mortgage much more efficient.

FR: How can networks help to support advisers and the wider financial industry?

Networks are able to offer advisers time, guidance and safety.  

How much time does an adviser spend on the FCA, FOS, industry press websites?  In this industry, the time spent trawling through regulations could cost advisers time, and therefore money. The most productive advisers are the ones that spend most of their time in front of clients, so for every client an adviser does not see, because they are filling in their Gabriel report, PI Insurance application or thematic review form from the FCA, they could be losing money. As a member of a Network you can just read the latest Compliance bulletin / Newsletter and you’re back up to date with items that matter to you and how you write business.

In regards to guidance and safety, it is in the interest of the Network to give you feedback on the business you write, because it reflects badly on both the advisers and the Network if a compliant is received. Networks can guide their advisers through the often confusing world of regulation and ensure that they are offering clients their best possible service.

FR: What will be the most significant changes in the industry over the next 12 months?

The Financial Advice Market Review has begun because the regulator finally realised that there was an “advice gap” caused by the RDR, and knew that something needed to be done about it. The government and the FCA plan to address the problems the RDR created, and make financial advice more accessible to all. They may have their work cut out, and will have to be careful not to undermine the changes they brought in just two years ago.  

The Mortgage Credit Directive is also set to come into force in March 2016, which will mean any purchases of buy to let homes will move from being regulated by the FCA’s consumer credit regime to their mortgage regime. This means that, to carry on second charge mortgage business after 21 March 2016, lenders, administrators and brokers have to be authorised and hold the correct mortgage permissions.

The online financial markets are growing at a significant pace and new regulation from the FCA may need to be created. Robo-advice looks like a growing force within the industry, and may shape the future of how advice is received in the next 12 months. This could lead to a number of changes within the industry, including the falling value of face to face advice, small firms struggling to keep up with expensive technology changes and software companies with no prior experience of the financial industry beginning to dominate the financial advice market.

Things are changing in the industry- and quickly. The next 12 months will have many regulatory changes but I am predicting that we will also see a shift as the industry embraces modern technologies to attract the millennial generation. We are just going to try and have to keep up!