A recent survey found most people aged over 45 want to retire soon but do not know if they can afford to. In fact, a significant proportion do not know if they will ever be able to retire comfortably. Surely one of the most basic roles of financial planning is to be able to answer that sort of question. Of course, clients may not always like the answer but they should at least know what it is.
The FCA is currently undertaking yet another review in order to address the advice gap. However, until we stop thinking about advice gaps and start to appreciate the fact there is a planning gap, it seems unlikely we will see any real improvement.
Most financial advice service propositions still focus on product sales. That is hardly surprising. The financial service regulatory regime is totally product centric. As advisers we obsess over such questions as: who offers the best pension or Isa product? Which company has the lowest charges, best performing funds or most flexible features? The outcome is advice but it is not planning.
In order to be a financial plan it needs to have a clearly defined set of objectives that can be quantified so that we can measure progress towards them. If we were all delivering plans like that no client would need to wonder whether they could afford to retire.
Alan Dick is chair of the Chartered Institute for Securities & Investment Financial Planning Professional Forum