One can’t move at the moment without hearing about the FSA. Industry “bookies” have money on 28th July for the delivery of the delayed platform paper. There is a sense of a collective sigh racing through the fatty arteries of the City as unit rebates now seem to be the inevitable final outcome.

Last week the FSA sent a letter to CEOs of wealth management firms. The Wealth Management Review letter starts with the observation that 14 out of 16 firms reviewed were judged to pose a high or medium-high risk of detriment to their customers. 79% of files reviewed had a high risk of unsuitability or suitability could not be determined. A Panorama program in the making....

At the heart of these concerns is the new-ish approach, supported by technological advance, to use tools and platforms to manage models or "bulk advice" which doesn't necessary take into account that people are all quite different. Platforms have a supporting role in all of this by supporting the delivery of risk profiling tools, bulk switching, model portfolios, awkward tri-partite agreements with discretionary managers ...... at best, an efficient and great way to provide neat solutions to all, a hallelujah for smaller clients previously "segmented" out. At their worst, a way for some "discretionary" rogues to charge vast sums for a simple model; a 'cookie-cutter' approach to specific individual needs.

There can be an inherent tension at play between technology and advice-this has been bubbling under the surface for some time. The recent Suitability paper and this Wealth Management Review bring these bubbles to the surface.

Client suitability seems (to us) to be the FSA catch cry to hold on to. Tools, models, templates are the starting point for a client discussion, not the conclusion. And that applies as much to platform selection, as well as portfolio modelling and composition. No computer can tell an IFA business what really matters to them and their clients, nor what their relative weighting should be to certain key selection points around functionality, price and service.

Back to the Wealth Management Review, were I on the receiving end of this letter, I would, in a mature and MBA-like manner, be wetting myself. It's quite a heavy-handed, 'guilty-till-proven innocent' tome. I understand the FSA's premise that advice must be client specific. But cast the clock back3 or 4 years, and firms were genuinely struggling with the implications of each individual adviser being an (arguably not always very good) fund picker. The introduction of "institutionalized decision making processes" has answered some of these concerns, embedded better procedures in firms and progress has been made.

We've identified the inherent tension that lies between technology and advice. Another dichotomy is fee and financial advice. So - you beat up wealth managers; more people feel the regulatory burden is too much and pack up shop; compliance overheads go up; the laws of supply and demand mean advice costs go up - and against all of that there are no clear guidelines for simplified advice which really COULD benefit from templates and platform-delivered tools.....................

I actually think that the FSA are right in their ideas about individual client suitability rising above an occasional technology-induced sleepiness, and it's important and laudable that they champion this..........but the techniques seem a little bit bully boy 6th form spotty prefect. The consequences of this combative approach coupled with an absence of clarity on what simplified advice actually is, threatens to leave an uncomfortably large gap in how we are able to service the majority of customers in the UK today.

Have a good weekend all - I'm off to Fund Forum in Monaco on Sunday, leaving the children with Daddy for the first time as I sneak in an afternoon on the beach. WAYHAY. Long live the mutual fund!!!!

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