"Some of the past-performance rules verge on the ridiculous," said Mark Dampier (pictured right), head of research at Hargreaves Lansdown. "It has got to the stage where advisers aren’t allowed to reveal short-term performance."
"In the past, management groups were tailoring short-term performance figures so they could say 'we’re the best-performing fund over a two-and-a-half month period'."
"I can understand why the FSA would want to stop that from happening, but if an IFA wants to point out that a poor-performing fund over five years has shown signs of recovery, they should be allowed to."
"A client can look at the information themselves, but the IFA cannot tell them directly."
"The industry gets criticised for not paying enough attention to clients’ interests, yet advisers are banned from providing them with important information. Something’s not right about that."
Financial advisers have come under fire recently for failing to act when their clients’ portfolios perform badly. In a recent article, Trustnet spoke to IFAs about their methods of reviewing clients’ investments.
Stricter punishments for breaches of regulation
"I think the FSA needs to come down much harder on industry professionals who break the rules and put the interests of investors at risk," said Graham Toone (pictured left), head of investment research at IFA AFH Wealth Management."I saw reports of a trader who posed as a director of a charity, in an attempt to raise the profile and share price of a company. He was fined more than £1m, but this isn’t the first time he’s committed this sort of crime."
Toone’s comments refer to Samuel Kahn, who posed as the director of a charity to bump up the share price of the company Global Brands Licensing.
"If you want to crack down on this sort of thing, the punishments need to be much stricter. The majority of people who do this sort of thing aren’t caught, so when someone is brought to justice they need to be made an example of," Toone added.
Shortcomings of RDR
"Whilst I get the sentiment of RDR, and actually go along with most of the proposed changes, I can’t help think that the lower-income individual will miss out on quality financial advice," said Chris Spear (pictured right), managing director of IFA Spear Financial.
"The reason why so few people take out a will is because of the fees involved and I can see the same happening with the financial management industry after RDR."
"I think there should still be a place for a loss-leader approach – the lower-income client gets quality financial advice and the smaller IFA gets a potential long-term client."
"Though a client might not make much profit initially, if you look after them and they stick with you through the years, they’ll give you more business as their earnings increase," Spear finished.