Re: Letters to the Editor: Confusion at Advocis?, by John De Goey,, May 10

Re: Letters to the Editor: Higher professional standards needed, by Greg Pollock,, May 6, 2016

Re: The wrong side of history, editorial, Investment Executive, May 2016

Mr. De Goey raised the question of whether the decline in the number of advisors in the U.K. was the result of the elimination of embedded commissions or the rise in proficiency standards.

The question is a good one and easily answered with the help of a Google search. The U.K.’s Financial Conduct Authority (FCA) issued a press release August 15, 2013 in which they noted that, in midsummer of 2012, there were an estimated 23,787 financial advisors. At December 31, 2012, when the new [proficiency] rules were implemented, that number had dropped to 20,453, a decline of 14%. However, by July 31, 2013 that number had increased to 21,684, an increase of 6%.

In November 2015, U.K.-based International Advisor reported that the number of financial advisors had grown to 22,500, an increase of 10% over the December 2012 number, although still 1,287, or 5%, fewer than in mid 2012.

In their press release the FCA stated: “The FCA believes the increase is attributable to advisers re-entering the market.” However, I find the most interesting part of the press release is the following: “Six months after the introduction of the new rules, 97 per cent of advisers have the appropriate level of qualification, with the final three per cent recent entrants who are still studying within the timescales permitted by the rules. This stands in contrast to 2010 when less than half of all advisers were qualified to today’s standard.”

This would suggest to me that the reason for the drop in the number of advisors was primarily due to a lack of proficiency, not the elimination of embedded commissions.

Kelly Rogers, CFA
Rogers Investment Consulting,

Photo copyright: gajus/123RF