RDR Charging - Media Reporting
Last Saturday's Daily Telegraph's
article on adviser-charging (which you may access by clicking here
) is perhaps just a typical example of the way in which the mainstream media tend to report on things. Yes, it's one-dimensional. Yes, it attempts (erroneously) to extrapolate from the specifics of a single case (and a single client-type) to a more general phenomenon. And, for most of us engaged in financial-planning, it manages to conspicuously ignore those kinds of service which clients retain our services for. It is easy to react to such journalism with irritation.
But it would be unwise to be too dismissive. There are things to be learned here.
The first observation we make concerns the GfK's latest poll, which shows that one third of investors would not pay
for advice again. This is interesting. Without having access to the specific questions asked, it seems reasonable to assume that the focus
of the survey questions was on the cost
of investing, rather than on the benefits
. It is hardly rocket-science to observe that if the questionner's emphasis is on cost
, then the survey is likely to smoke out of the woodwork those consumers which are peculiarly cost-conscious. One might argue that this would be a constituency which IFAs might always struggle to sell their services to. And, it is hardly irrelevant to our consideration to note that this survey was conducted at a time when most of us are still struggling to manage our lives in George Osborne's Austerity Wonder-World.
But this does not let us (IFAs, financial-planners, and wealth-managers) off the hook. Whatever our advisory proposition is, it needs to stack up. There needs to be a value-based quid-pro-quo where the fees payable seem reasonable in relation to the benefits received. It is entirely possible that the 20,000 negative respondents weren't just Scrooge's direct descendants, but might also struggle to identify the 'value' of whatever it was that their adviser was supposed to be doing.
In the individual case at the heart of this article (Richard Mills), it does seem as if the IFA he employed exemplified a very restricted, transactional remit. Insofar as it is possible to extract any dependable lessons from this kind of journalism (and I appreciate that it may be a bit of a challenge), it does appear to be the case that, once this IFA had supervised a consolidation exercise, he had precious little additional value to provide. There's no mention in the article of such services as:
efficient (and appropriate) asset-allocation models
rebalancing in line with risk-preferences
lifetime discounted cashflows
Perhaps the client in question simply did not value these things. Perhaps the IFA in question didn't offer them. It is highly unlikely that Mr Mills would have had sufficient technical expertise to handle them himself, so it does seem likely that he had quite a low view of what his IFA was able to do for him. The article gives the impression, by defining things simply in terms of cost, that the IFA had not exactly distinguished himself in defining his service proposition.
As we have argued now for many years, it is proposition first, cost second
. If we get the two things the wrong way around, we are destined to be fighting an eroding client-base forever and a day.
Updated ValidPath Resources
Our 'ValidPartner' Members can download the enhanced version of our 'Guide to Fee-Based Advice' from our Business Development page, 'Your Instant RDR-Friendly Proposition'.