As a child who grew up in the 1960s and 1970s, I feel vaguely cheated. Between Tomorrows' World, Blue Peter and Magpie, I definitely feel we were promised individual jetpacks by now. But somehow that has not happened.

I have similar feelings when I look back over the last 15 or 20 years of change in financial services, especially as it relates to the operation of a Financial Planning firm...

My prism for this article is: “What did we have and do that was better than before, but not as good as we were promised?”

I guess the first area to look at is IT – especially back office systems.

I may be wrong, but I see very little operational improvement from the days of First and Quay. They are all born out of new business processing and commission tracking systems, and still feel that way – at least to me.

And Prestwood can put their hands down as well – it works very well if you ran the business according to Prestwood, but if you had a different model…?

I saw some examples of ‘AI’ powered systems recently, and the underlying assumptions were strikingly similar – it's all about taking on a new client, and then passing some compliance checks. And then marking its own homework.

I am sure that is useful for many, but I am also sure there are a whole bunch of small firms like ours who want the shoe to fit the foot, not the foot to fit the shoe.

The other let down is sort of IT related – and it's about obtaining data on clients legacy products. In short, the dreaded ‘Letter of Authority’ problem.

This should have been solved by IT. It should be about clients and IFA portals, with Read Only Data available in seconds. OK, you can stop laughing…

We all know that not only is the reality a million miles from this, but the reality is getting worse.

It takes hours of time and weeks of delays to get anything out of many companies, and even then it is often palpably, mindlessly wrong – wrong address, made up charges (amazing how many zero charge funds there are…)

Moving away from IT, I would say that as a sector we missed an opportunity to actually be of real service to clients. We took all the burgeoning power of IT, and used it – without putting too fine a point on it – to simply rip off consumers.

Instead of simpler, cheaper and more reliable products, targeted at the consumer need to save more and protect families, far too many resources were devoted to developing opaque products, with odd penalties, that always seemed to just go wrong. Key Data, Arch Cru, Structured Products, 130/30 funds.. The list is sadly far too long.

I would contend that the reason we had so many of these failures is that faulty regulation created the moral hazard in that those who created these toxic products were immune from the horrible but predictable outcome when – not if – they went wrong.

I accept that many IFAs should have done better on ‘Due Diligence’, but for those brought up to believe that these big branded firms somehow cared about client outcomes, it was a dreadful, often business destroying, learning curve.

There is a theme here, and the story of Banking ‘Apps’ probably sums it up. The Banks all launched Apps, some of them were very good as well.

But the minute a critical mass was achieved using these bits of IT, then the banks could say: “You can do everything on the App. So we can close the branches”.

And remote communities, the vulnerable and those who do not quite fit the boxes in the drop down menu were left to one side.

By no coincidence at all, we have since seen a rise in financial fraud, targeted at these very people.

We were promised a world where IT allowed better consumer outcomes, supported by smart, outcome based regulation. The results have been, at best, patchy.

Next time I want to look at what we have done well – and there is a long list, I am pleased to say! 

Phil Billingham FPFS CFP Chartered Financial Planner, Chartered Fellow (Financial Planning) is a Financial Planner and a director of Perceptive Planning, a Chartered Financial Planning firm based in London and Essex. https://www.perceptiveplanning.co.uk/

Biography: Phil joined the profession in 1982 and is a past director of the Institute of Financial Planning (IFP) which merged with the CISI in 2015. He is a past member of the Financial Planning Standards Board (FPSB) Regulatory Advisory Panel. He is a specialist in helping advisers cope with regulatory change and has worked with advisers, planners and regulators in the UK, Europe, USA, Canada, South Africa and Australia. He writes this column most months for Financial Planning Today.