But with continued regulatory change ahead, not to mention all the economic and political uncertainties, it is also worthwhile taking a moment to think about the vital role which trust can play.
As evidenced by the recent local election results, the current debacle on MPs’ expenses has damaged the trust many people had in their MPs and the Government. This has clearly shown that trust can take years to build but can be damaged in seconds.
Recent events have also shown us that trust in banks has been severely damaged. A recent Aifa communication quoted research from Which? showing 37 per cent of people think banks cannot be trusted to act in the best interests of the economy while 29 per cent do not trust their bank to be sympathetic to them if they ran into difficulties. No wonder the consumer gets confused and unsure who to turn to.
So here lies the crux. As IFAs, we act on behalf of the client and not, as is the case for a tied or multi-tied salesperson, on behalf of the product provider, bank or insurance company. Furthermore, we have the clients’ best interests at heart and can advise from products across the whole of the marketplace. Our aim is to build long-lasting relationships with clients so they can rely on us as their trusted adviser.
Recent results from a YouGov consumer survey confirmed this. Ninety-eight per cent of consumers who already have an IFA state that it is their IFA who they trust most to offer financial advice. The public is growing to understand that IFAs have core values which mean they will act on their behalf and are driven to do well by the client.
Next month’s RDR consultation paper should go further to address this and give clarity to the consumer on who is acting on their behalf and whose primary interest it is to meet the needs of the client.
By moving the models of our own business to focus on wealth management, we hope to erode the perception that some consumers think that independent advice is free. Our remuneration model aims to improve transparency and ensures the client can see the costs of each stage of the work that is being completed on their behalf.
In working this way, we believe advisers can build greater value in their businesses to the extent that a purchaser will see real value when they come to sell and/or retire.
The financial services landscape will look very different in years to come. By embracing the steps needed to cultivate trust and transparency now and consequently building greater value in your business, this will also build greater stability for both adviser and client longer term.
Chris Smallwood is chief executive of 2plan wealth management