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Good regulation stimulates good advice. Comparing new regulations in Oz, India and the UK.

New adviser regulation in Oz is largely focused on disclosure of remuneration and a rather toothless definition of client first. Commissions are readily replaced by fees as most platforms run cash accounts so there is little impact from the banning of commissions. There is no way a client can tell without careful reading of marketing materials whether they are receiving independent advice and/or in-house investment solutions. It looks like vertically integrated manufacturing/sales models will dominate

On the other hand India promises to be a rather more useful comparison to the UK. The development of a financial planning profession under its new client centric regulation looks to be more Client friendly. The FSA’s March 2011 Guidance on Investment Suitability and the RDR’s move towards qualifications, disclosure of potential conflicts of interest and banning of commissions are largely consistent with new rules Gazetted in India in January. The key difference being that advisers in India are being given the choice, at least at this stage, to opt into the new regulatory regime. Should they not elect to do so there are myriad of alternatives to stay as product salesmen. Sensibly the Indian advisers I am talking with are choosing to proceed slowly but recognise the inevitability to change.

The early adopters, as early adopters everywhere, usually take the opportunity to progress their move to professionalism more rapidly. The key learning I have found in Oz, UK and the US is that regulation, even new regulation, is the low business hurdle. While success does not necessarily follow from exceeding regulatory obligations, it usually does. Consequently I have just finished my business planning for 2013. I have allocated much of my time to the UK, followed by India. Oz being a distant third. The UK and India are full of potential for good advice and where there is good advice there is good business for me.

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