Financial watchdog 'should employ more former advisers '

A leading independent financial advisor has called for the industry 's watchdog to employ more people with hands-on experience of work in the sector.

Mike Jordan (pictured), whose company Jordan Financial Management has just celebrated 25 years in business in Sutton Coldfield, says the Financial Conduct Authority (FCA) would better understand the challenges faced by Independent Financial Advisors (IFAs) if its staff had direct experience of the market.

“I would like to see a significant proportion of the staff at the FCA coming from a background of former IFAs and other people who have worked in the personal financial advice market, ” Mike said.

“That way, they would have a clear understanding of what we actually do and, in fact, what a great job most financial advisers do and how much they help people and improve their quality of life.

“It would also help them better understand what clients are looking for in relation to advice and then how the regulations need to work to protect consumers but also promote and encourage the taking of advice.

“Hands-on experience within the sector would help the FCA work more closely with IFAs. ”

Last month the FCA published a long-awaited 66-page review of the financial advice market, which warned of competition not operating effectively in the sector.

The watchdog also warned IFAs were not being encouraged to offer more affordable services, particularly to less wealthy customers.

The FCA called for a broader range of services in the sector to support more consumers in deciding whether to invest and find appropriate investments.

However, Mike said the issue of growing regulatory costs could be stopping the market from reaching more consumers.

He said: “Every time the regulator adds more requirements and processes you have to then spend more money on either employing more staff or outsourcing to get these requirements covered.

“Then there are the spiralling regulatory and FSCS fees - so the starting point is charging enough to cover the costs of things you are required to do under regulations, then the costs of enabling your business to achieve the level of service you want to provide to your clients. ”

The issue of growing regulatory costs has been at the forefront of calls for reform within the industry this year, but it has been given new wind in response to the regulator 's rally call for the market to reach more consumers.

The FCA warned the clustered charges it had found in the market were not explained by “economies of scale ”, with little indication businesses with more clients, or more affluent clients, had lower charges.

However, Mike said he welcomed FCA plans to double-down on so-called 'Robo-advice - automated online investment services which typically ask 10-15 simple questions and then allocate a basket of investments.

He said: “Taking independent financial advice is the better route for me because, in most cases, the adviser picks up on so many things when they meet the client above and beyond what the client originally came to speak to you about.

“I suspect all this is missed with robo-advice and you 're then also limiting yourself to one investment provider. ”