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Editor’s note: Advice is more than just a commercial exercise

In the public’s perception, “finance” is a completely homogenous sector. I imagine financial planners’ frustration at being confused with Square Mile traders is only rivalled by my resentment at being lumped in with gossip columnists.

Individual advisers are doing a brilliant job attempting to redress that balance. But concerted effort is needed to improve the profession’s reputation. To that end, Good Money Week kicks off on 29 September, followed shortly by Financial Planning Week on 3 October.

Advice firms up and down the country have already agreed to give up their time to host free planning sessions. We can only hope more follow suit, but I frequently hear the same message from advisers as a reason they might not: “All this stuff sounds great, but I’m just too busy with my clients.”

Cover story: How far should pro-bono advice go?

That should be taken as a huge commercial positive for the sector. According to the FCA’s latest data, advisers’ retail investment revenue grew 21 per cent in 2017.

Revenue from ongoing customers was up 28 per cent and initial charges were up 24 per cent.

Crucially, this was reflected in pre-tax profits, which jumped 23 per cent to £700m, with small firms taking the highest profit margin at 43 per cent.

This gives the vast majority of advice firms, large and small, scope to conduct some non-fee-earning work over the next few weeks, and hopefully longer still.

Yes, no one wants their trusted financial advice firm to fold because it was focused too much on doing good things for other people and ignored the bottom line. But if the financial planning profession wants to convince people it truly is client-centric, it really needs to make more noise about the genuinely altruistic activities it engages in.

For firms where demand does not yet outstrip supply, improving your profile in your local community can hardly be seen as a negative either, no matter if it is motivated more by business needs than altruism.

If advisers are worried that the generic information they give to consumers as part of these pro bono sessions might come back to bite them when a customer decides to act on what they’ve heard and then lodge a complaint, I’m not sure they should be.

No ombudsman in their right mind would rule a consumer received advice without anything like a formal recommendation or fact find to show for it.

Besides, all of the literature around Financial Planning Week makes it abundantly clear that the sessions are to serve as a financial health check rather than a paid-for planning service that would entail the subsequent regulatory protections. Both potential clients and advisers should embrace that.

Justin Cash is editor of Money Marketing. Follow him on Twitter @Justin_Cash_1


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There is one comment at the moment, we would love to hear your opinion too.

  1. “No ombudsman in their right mind would rule a consumer received advice without anything like a formal recommendation or fact find to show for it”

    We will all be glad to learn that MM will cover the costs of such an event should it happen!

    Justin, I also loved, that you wrote a sentence with “ombudsman” and “in their right mind” for the first time in recorded history 🙂

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