London is arguably the world’s premiere financial capital and yet most UK citizens are financially unplanned. There is a lack of buy-in from those outside the square mile. The regulator is attempting to redress this through its Retail Distribution Review by creating a simpler regulatory landscape in which financial advisers will consider the whole of market on behalf of their clients without the conflict of interest arising from which provider will pay them the most commission.This should be reassuring for consumers but could be less so for those who would be financial advisers.

The regulator is also suggesting that there should be a step change in the professional standards and qualifications required of advisers. Those in the industry without the requisite qualifications might prefer to be grand-fathered in to the new regime but this option may not be open to them; the regulator is considering imposing the full entry via examination route.

Is a one-off set of exams imposed on an experienced practitioner the most effective way to raise standards? It is certain to impose strains on their business and home life and as our business is all about relationships this is unlikely to be ideal. Examinations also are not noted for delivering long-term changes in behaviour.

Something that could, however, would be a more rigorous CPD regime where practitioners would be assessed for their weakness and take on an appropriate programme of remedial CPD. This would form part of their business life, open them to new practices, and could promote business opportunities for them. Also, the longer term nature of CPD would be more likely to encourage a more enduring improvement in standards.

The financial advice industry needs to rise to this challenge, however, by delivering rigorous CPD. The pledge signed between the Chartered Insurance Institute, Institute of Financial Planning, Securities & Investment Institute and the Chartered Institute of Bankers in Scotland, to form a single, independent professional standards board for advisers, makes this possible.

By embracing a structured programme of CPD that supplements their skills, behaviour and knowledge, advisers can establish themselves as the trusted professionals they deserve to be, reflected by an increased uptake in the financial planning they offer, from consumers.

The hefty swings witnessed in the FTSE 100 index in recent times are doing nothing for the confidence of the ordinary investor. All it seems to signal is that investing in top UK registered companies is nothing other than a lottery.

Most of us were brought up to believe that investment in stocks and shares was for the long term. We also thought that the stock market was an accurate leading economic indicator as it focused at least six months ahead and had already discounted the likely future events in its stock pricing. Not so now.  What we are witnessing is reminiscent of a herd of wildebeest on the open plain, sniffing the breeze for the slightest whiff of trouble and then when they sense it, stampeding in the opposite direction. 

How is the small investor supposed to have the slightest confidence in the market in these circumstances? We have always known that the herd instinct was a powerful factor in market movements, but the recent volatility in the markets has exposed the degree to which they are now operating to the shortest of timescales and on the flimsiest of indicators.

While these conditions remain, ordinary punters’ faith in the whole system will remain very jaundiced and only a sustained bout of sanity will be enough to entice them back in. 

The Defaqto QuantRater - used by many advisers in creating portfolios for their clients - has had it’s quarterly review.

The rating can be found through an easy sift in Aequos Engage for both unit trusts/OEICs and for life and pension funds. Wherever there is an investment link to a product, the QuantRater can be found.

Funds are reviewed at the end of March, June, September and December and a list of the unit trust/OEICs that achieved a rating of 4 or 5 are shown on the attached lists (listed by ‘IMA Sector‘ or by ‘Provider‘).

A Fact Sheet and Technical Guide explaining the rating is also attached for your use.

On 25th January a number of changes take place to the ABI Life and Pension sector criteria. The changes will be reflected within Aequos Online and Aequos Engage from that date and you can view them via this link.

We hope you find this information useful,

The Defaqto QuantRater team