With two major regulatory initiatives heading advisers’ way in 2018, this year has been one of preparation for the advice profession.
Mifid II will be the first to hit on 3 January, and advisers have had to spend much of this year understanding the implications for their clients and their businesses, as well as for the organisations they work with such as discretionary fund managers and platforms.
If that wasn’t enough to induce a regulatory headache, firms have also had to contend with the General Data Protection Regulation (GDPR), which comes into effect on 25 May.
Elsewhere, the aftershocks of pension freedoms continue to be felt. Away from the damaging headlines surrounding defined benefit (DB) pension transfers, advisers have had to carry out their planning against ever-changing policy – the uncertainty over the money purchase annual allowance (MPAA) being a case in point.
Here, we look at the top 10 Illuminate articles that have caught advisers’ attention this year, and the topics that have been at the forefront of the financial planning agenda.10) The FCA’s proposals for defined benefit transfers
Undoubtedly one of the major topics dominating the advice sector this year has been the issue of DB transfers. In July, the FCA sought to update its rules on DB transfer advice as demand for pension transfers surged. Nucleus product technical manager Rachel Vahey outlines the key takeaways from the FCA’s consultation paper, but questions whether the proposals move the debate on or will do anything to stem the DB transfers tide.9) ‘The sands are shifting’: The move away from percentage-based charging
Triggered by an article by Jacksons Wealth Management managing director Pete Matthew, this piece looks at the debate around adviser charging models and how both clients and advisers are beginning to question whether an ad valorem approach is appropriate. We speak to advisers about their different approaches to charging for advice and the rationale that sits behind alternative models.8) Alistair Cunningham: Our black and white approach to DB transfers
At the Personal Finance Society Festival of Financial Planning in Birmingham last month, Wingate Financial Planning director Alistair Cunningham set out his firm’s “deliberately low-risk” process for handling DB transfers. He believes most people are better off staying in their final salary pension scheme, and says: “For me, the million dollar question to ask clients is: why are you not most people?”7) Is the MPAA for this tax year £10,000 or £4,000?
In the run-up to the general election in June, the government decided to park a number of pensions and tax policy measures, including a cut to the MPAA from £10,000 to £4,000. This resulted in confusion about what the limit was on pension contributions where benefits have been taken flexibly. Nucleus’ Rachel Vahey suggested advisers err on the side of caution, and work on the basis of a £,4000 MPAA limit. In July, this proved to be sound advice as the government confirmed not just the cut, but that the £4,000 MPAA would apply retrospectively from April this year.6) How to avoid the GDPR and Mifid II clash
In this article, we look at the need to consider Mifid II and GDPR alongside each other. Software and consultancy firm JHC head of regulatory change Andrew Watson examines the apparent contradictions between the two frameworks, and the nuances of storing more data while keeping privacy front of mind. He says: “Data protection cannot be viewed as a bolt-on afterthought.”5) David Ferguson: How fund management needs to evolve
Nucleus chief executive David Ferguson examines the path that led us to the FCA asset management market study and the platform market study. He looks at how the dynamics of the asset management sector are shifting, and argues fund groups need to simply get better at what they do while delivering greater value for money for investors.4) The GDPR 12 steps: How financial advisers can get ready
The second of our most-read articles focusing on GDPR builds on guidance set out by the Information Commissioner’s Office, the UK’s data protection regulator. Moneyinfo managing director Tessa Lee sets out the key steps firms need to consider to comply with GDPR, and how these relate to advisers and the client information they hold.3) Strange things are happening to the lifetime allowance
With a nod to hit Netflix series Stranger Things, Rachel Vahey crunches the numbers to demonstrate why the marginal increase to the lifetime allowance next April to £1,030,000 could mean significant tax savings for some clients. She also makes the case for scrapping the lifetime allowance altogether – a plea sadly unheeded by chancellor Philip Hammond in the Autumn Budget.2) The kind of annual client meeting you want to experience
As a registered life planner trained by the Kinder Institute, Michael Fairweather of Real Life Financial Planning tells the story of how a planning meeting inspired a couple with a young family to achieve a better a quality of life in the space of just two years.1) Phil Young: Why Mifid II 10% rule makes no sense
The emphasis around Mifid II compliance for advisers initially focused on call recording, but as advisers and others delved into the detail it became clear Mifid II had much wider implications than simply tougher recording requirements. In particular, Zero managing partner Phil Young challenges the rule that means clients must be notified if their portfolio drops by 10 per cent or more in a quarterly reporting period. In his words, this is nuts, and he adds: “If you don’t agree, I’ll convince you.”