Recently, I have been working in the company of Financial Advisers. I can guess what you are thinking! First off, I need to confess that I had mixed feelings about the industry too. Financial Advisers do have a reputation to contend with don't they, justified or not. You know the sort of thing - crooks in suits, in league with self-serving banks and insurance companies. Commission is their only real interest. Nothing too flattering and nothing too exciting.
Produce some brochures and a website that projects a more professional, more upfront and trustworthy image for our business. That was the brief. Not wishing to sound cynical but this was probably, in part at least, prompted by FCA changes designed to ensure adviser charges become more transparent. In the past the adviser made his money through commission from the mortgage, pension or insurance provider. This fee was supplemented by an annual percentage payment to the adviser - for the life of the product/service. But now, the client must be told the cost of the advice s/he is getting - up front and clear, before dotted lines are signed upon. Certainly, a bright and positive image was required - to take advantage of a financial sector reborn.
A need for such crystal clarity has, not surprisingly, seen the
banks disappear from this branch of financial services, which of course has
proved to be a great boost to the Independent Financial Adviser. If we don't trust the banks anymore, and the banks can't trust themselves to provide
a good service for a fair price, where can we go for expert advice? Can we really trust the advice of a financial
adviser? I suppose the first question is - 'just how expert is s/he'?
One of the major changes in
recent financial legislation has been to ensure IFA's are well qualified. This
has created something of an Exodus as 'old school' advisers unwilling to put in the, not insignificant, study
time exit stage left. Those remaining are
generally younger, more professional and better qualified. For the career minded higher qualifications
are essential - qualification translates into credibility and, with that, higher earnings. 'Chartered' is the gold standard.
So let us accept that nowadays
IFA's are expert in their field. Clearly some will be more expert than others
and some will have particular areas of expertise. That sounds like an improvement - or are we just facing smarter, better qualified, more determined 'crooks in
suits', better able to relieve us of our hard earned?
Whether we
have pots of it or very little of the stuff, there will probably come a time
when we will have concerns over money. This could surround the house we buy or the investments we make. It may well surround the way we plan for retirement. We
might just need to seek out an expert for some well measured guidance -
just to put our concerns to one side.
So you bite the bullet and start
to discuss some of these issues with a chap in a suit who, initially at least, you really
are not too sure about - he seems very young.
Cheeky little sod will probably ask you to reveal financial details that you haven't even told your other half about.
He will then tell you that his service will cost say £500. I know it
sounds a lot, but you can't have it both ways can you. If he's not going to get a bung
from a favoured service provider then it's got to come from you. Of course it always came from the client in the past
- it just wasn't talked about and was quietly taken in the cost of the
financial product - a secret!
You can expect to be confronted
by some straight talking as well. He will probably challenge your ideas on financial
planning. Initially, you might not like this, but that is exactly what a financial
adviser is qualified and legally obligated to do. The regulatory body, the FCA, says he has got
to find out your financial position and your objectives before he can offer advice. Obvious really. They could scrutinise the advice he gives,
and he must be able to defend that advice. Compliance is a watchword in this industry.
