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Fraser Donaldson: A thorny question of cash interest

Investment expert Fraser Donaldson reviews the FCA's latest 'Dear CEO' letter on cash interest. Mr Donaldson, Insight Consultant at Defaqto, writes a regular column on DFMs for Financial Planning Today magazine with the latest column reproduced below. To view Fraser's past columns and lots more content in the magazine register and subscribe to the magazine. If you are not yet registered for Financial Planning Today website do so now to find out more. Registration is free.


Robin Melley: Why I'm in several professional bodies

Experienced Financial Planner Robin Melley looks at the benefits for Financial Planners of being a member of more than one professional body.

There are growing numbers of Financial Planners who, like me, are longstanding members of one or more of the recognised professional membership bodies (such as CISI, LIBF and PFS) who are also reaping the benefits of being a member of The Society of Trust and Estate Practitioners (STEP) but why and what does STEP offer to Financial Planners?

For those who do not know, STEP is a global professional body, with more than 21,000 members comprising lawyers, accountants, trustees, financial planners, tax advisers and other practitioners that help families plan for their futures.

Consequently, STEP members are typically also members of their own professional membership bodies – for example, lawyers may also be members of The Law Society.

Full STEP members, known as Trust and Estate Practitioners (TEPs) are internationally recognised as experts in their field, with proven qualifications and experience.

I joined STEP many years ago for two principal reasons: to enhance my technical knowledge and skills on estate planning and advising clients in vulnerable circumstances, and to enhance the collaborative work that I was doing with other professionals – typically lawyers, tax advisers and accountants.

It is fair to say that it has taken hard work to achieve the TEP qualification on top of being Chartered but it is no different for a lawyer or accountant achieving the same qualification on top of becoming Chartered in their professions.

However, it has been very worthwhile and has resulted in better outcomes for clients through the application of specialist technical knowledge and the ability to have more meaningful collaborative working relationships with other STEP members, who may also be lawyers, tax advisers and accountants and so on.

One of the reasons that Financial Planning is such a valuable profession is because it requires a holistic approach and it implies an ongoing service through every stage of a client's life.

Lawyers, accountants, and tax advisers are often engaged to provide packages of advice, so it is hugely beneficial for other professionals to work with Financial Planners, who are engaged to provide long-term advice and service.

Certainly, from my perspective, I am always reassured that a lawyer, tax adviser or accountant is a fellow STEP member when I refer clients to them.

• STEP's website can be found here: STEP

Robin Melley TEP, Chartered MCSI, FLIBF FPFS is managing director of Chartered Financial Planner firm Matrix Capital Limited in Shropshire.




Column: Has planning failed? A former planner's view

Recently Financial Planning Today editor Kevin O'Donnell posed the questions whether Financial Planning has failed to reach a wide market. Former Financial Planner Mike Middleton, now running a coaching and retirement planning business, responds in this Guest Column.

So has Financial Planning failed? This was the controversial question posed by Financial Planning Today's editor Kevin O’Donnell in a recent column.

I believe there are two ways of looking at this question and therefore two possible answers. One view is to ask: have advisers and planners failed their clients? For me the answer is a resounding no.

Being a Financial Planner today is in some ways easier than it has ever been and yet, conversely, more difficult. This contradiction is not an unusual circumstance in the modern world; however I will set out my argument.

Technology has made many things easier for planners whether producing lifetime cashflows, producing quality reports or assessing suitable products and investments. All are now easier than the sometimes laborious task of intensive reading and comparing information buried in reams of literature that was commonplace in the past.

Unfortunately, there is a “but” as technology also presents problems, aside from older clients being fazed or reluctant to engage with tech, software adds the temptation to increase oversight and enquiry.

Legislators and regulators like to be able to show the wider public how they are actively keeping an eye on regulated advisers and frequently assume that because data is available then it should be easy for an adviser to collate and send in more information than before.

How much of the regularly submitted data is checked is anyone’s guess, but we know from both medicine and teaching the amount of time spent on bureaucracy has increased and not decreased with the introduction of more technology. In this regard the life of a planner has become more difficult and of course more expensive.

None of this is to say that regulation has been a bad thing, it has mostly been a good thing. Today people know when they visit an adviser they will meet with and be advised by a suitably qualified person who is also subject to oversight and that there are mechanisms for complaint and redress if the client has been poorly advised.

With the added challenge of paperwork and oversight has come increased back office costs. Just as technology has made financial products less expensive, so other costs have risen. The knock on has often been that firms have reduced the number of clients they serve and the wealth of new clients they take on has had to increase for the business to remain profitable. The result is that more people than ever are unable to access advice and in this regard it could be said that Financial Planning has failed or is failing.

However, it should not be the role of the individual adviser to solve the advice gap on their own, make a dent maybe, or if you have a groundbreaking solution that will solve a great swathe of the advice gap, go for it. Realistically, however, most of the time the main priority the planner must be to focus on their client, serving them, serving their families and making sure their own firm is profitable, enabling them to create and support jobs which in turn support their employees and their families. 

One clear area of failure has been in the recruitment of new blood to the profession, or at least in sufficient volume to meet increased demand. At best the number of registered advisers has remained flat over the last decade.

Many businesses have invested in academies, and these are to be welcomed and encouraged, however part of the recruitment failure lies outside the scope of individual advisers and planners.

Insufficient support and encouragement in schools, colleges and universities to join what is a rewarding profession comes to mind, as does the constant drip of negative news about financial advisers from legislators and regulators alike.

If the regulator truly believes in what planners do, they could surely do more to show what a valuable and important role advisers and planners perform in the lives of the people they serve. That's one way to help grow the profession and serve more people.



Mike Middleton is a former financial adviser with over 34 years’ experience during which time he built and sold two profitable practices. One of his firms, Middleton Financial Planning, was a Senior Partner Practice of St. James's Place Wealth Management and he was involved in the firm for nearly 21 years. He was an early advocate of lifetime cashflow planning. In 2019 launched a standalone coaching and retirement planning business to help advisers create better outcomes for clients.

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Fraser Donaldson: DFMs see avalanche of new portfolios

Investment expert Fraser Donaldson of Defaqto writes a regular column on DFMs for Financial Planning Today magazine, our sister publication and this is his latest column in the current issue to give you a taste of the column. To view Fraser's past columns and lots more content in the magazine register and subscribe to the magazine. If you are not yet registered for Financial Planning Today website do so now to find out more. Registration is free.

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