On 'Doing Network' 

The last quarter of each year is filled with a number of competing priorities.  There's the half-yearly challenge of completing the FCA's Gabriel return on systems that seem never to advance beyond the dysfunctional.  There's the yearly process of gathering together data, analysing it, and compiling it into a usable form so that we can complete our PII renewal accurately, reliably, and on time. We are always very conscious of the responsiblity of getting this latter process right, because a great deal can hang on having good-quality cover that does actually underwite the real risks.  In practice, each renewal takes a good solid fortnight of careful work.

And then, there's the next year to be thinking about.  For us, 2015 has in many ways been a period of consolidation, and reflection on how we may continue to build ValidPath into an effective, collaborative and supportive network that genuinely facilitates individual member-firms' own aspirations, whilst at the same time keeping the Regulator and our PII Underwriters happy.  In the past, I have used the analogy of running a Network as akin to cat-herding, but the reality is that it is more often like tightrope-walking:

  • We have to charge enough to enable us to maintain a stable financial operating environment (where Members are not bombarded with demands for additional payments whenever the FSCS and FOS decide they'd like some more cash), but not so much that there isn't a genuine cost-advantage, compared to that of being directly-regulated.  That requires a very careful ongoing scrutiny, especially as we address the FCA's brave new world of business turnover-related fees;
  • We have to find mechanisms for deriving sufficient, ongoing, reliable data from Members, so that we can fulfil everyone's regulatory reporting responsibilities without dragging all our Members into the demoralising Bog of Eternal Stench that is now the universal experience for directly-authorised firms.  That's what Clarity is about, in part;
  • And there's the overarching supervisory responsibility of the authorised firm:  the FCA expects us to implement acceptable standards (that's the 16-Step Adviser Process, amongst other things), monitor that individual Member Firms are complying with those requirements, and take effective steps when things slip a bit.  As always, there are Firms who are consistently good in this area, and others where the cat-herding analogy is perhaps the kindest description - our focus is to find the right kinds of balance between individual Member Firm autonomy, and shared de-minimus standards that everyone could or should sign up to.

Underpinning these tensions, we have a number of ground rules of our own:

  • We don't expect more from our Members, in practice, than the FCA expects from us - that is to say, we don't 'gold-plate' the regulatory edicts that come to us from on high.  Indeed, we will always attempt to ameliorate the impact of these demands - that's not an approach you'll encounter with other Networks, and of course, directly-authorised firms have nowhere to hide in that respect;
  • We won't force Member Firms into the straitjacket of a business model that is foreign to them - the de-minimus requirements implicit within Clarity would be common to pretty much any equivalent practice-management system, and would certainly reflect the FCA's expectations in terms of the detail of record-keeping.  Around that core structure, our Members have developed quite varied business models which range from the transactional, through to wealth-management and 'pure' financial-planning;
  • We will, absolutely and unremittingly, continue to emphasise practices and disciplines which will drive down risk.  We would expect all of our Members to be committed to minimising loci of risk within their own businesses, as well as expecting that other Members are doing the same;
  • We are committed to building a better collaborative adviser community (more later on that);
  • We will provide all the ingredients for a de-minimus business infrastructure, to enable all Member Firms to be fully-functional, straight out of the box.  We don't expect you to slavishly use all these components 'as is', if your own model does not require every element provided (for instance, you may prefer Voyant to CashCalc) - but our aim is to supply a minimum degree of functional equipping.  All such components are provided on terms that would be impossible to obtain on the open market, and are usually subsidised by ValidPath to encourage Members to adopt them into their advice model;
  • We will always support a genuinely independent advice model.  We are the first to recognise that there is such a thing as an 'independent mindset' - and this feeds through, again, to striking the right balance between centrally-determined controls and common standards, whilst at the same time allowing Members the freedom to develop their own emphases and business models.  It has been confirmed, from several sources, that ValidPath are the only regulated Network persisting with this kind of ethos.


And so we come to 2016...


2015 has been an onerous year, as we have sought to formalise and implement the de-minimus standards which have been implicit within Clarity (and our guidance) since 2009, and make the implications explicit to the Membership.  Whilst there is still more work to be done there, our focus is going to be on continuing to build a more rewarding, collaborative, working environment:
  • The ValidPath/Parmenion Review Meeting is slated for Thursday 14th January in Bristol.  We have benefited from the involvement of committed users of this system, and have welcomed involvement in this process.  If you are such an individual, please contact Kevin Moss if you would like to attend;
  • Invitations will be going out shortly for applicants to join the Pension Transfer Working Group.  This is aimed at those with advanced pensions qualifications (G60 or AF3 equivalent) who would wish to be active in this area.  This Group will be agreeing processes and standards to govern the delivery of excellent outcomes.  We have already set up our own, in-house, transfer-analysis functionality which can be extended to include new users. Our intention is that this group will be available to other member firms who do not have the in-house capacity to handle such enquiries - the robustness of this setup will give everyone confidence that the work will be conducted to an acceptable standard;
  • In February 2016, we are planning our Technology Day.  We have already sought the engagement of a good range of technology-providers, and the emphasis will be on the day-to-day practical use of systems to deliver effective, repeatable outcomes for clients.  Members may wish to send their administrators and paraplanners to this one;
  • Early in 2016, we'll also be inaugurating a Complex Investment Working Group - aimed at all those who forsee the inclusion of EIS, VCT and BPR products, as well as Structured Products or even Hedge Funds.  We are conscious that within these specialist areas, good-quality comparative data is often somewhat rare, and wish to support a genuinely collaborative working environment, one where individual practitioners adopt shared standards;
  • And there's more...but I'll leave that for another time!


 

Kevin Moss, 11/12/2015