I have to disagree with much of what was said by Liberal Democrat Treasury spokesman Lord Newby at the LibDem conference last week.
He was wrong in saying that IFAs are a “doomed species” and that his children’s generation will seek free advice almost exclusively online.
Core financial advice has to be face-to-face. If you feel unwell you cannot just go online and find the symptoms to solve the illness, you have to actually see a doctor. It is the same with financial advice. You cannot just go the web and pick up the facts because nothing fits everybody.
We do more of our business online because we have to. But that is not advice, that is filling in and submitting applications and dealing with queries, details and problems. Doing this online leaves the adviser and the client at a disadvantage because nothing works better than talking to someone directly and you are able to deal with the problem there and then.
Newby also said the IFA process is an “appalling business” because clients are forced to submit all their details and “take an hour” to go through everything. You wonder whether Newby has ever needed advice on something. If he hasn’t then he should not be commenting and if he has received advice from a good IFA then he will know what it involves.
You have to take time when it comes to proper financial advice. An adviser has to first go through the regulatory paperwork, which they have no choice over, then they must go through the money laundering precautions, which again they have no choice over. Only then can the IFA sit down with the client and go through their situation and goals.
The process might take an hour, three hours or all day. Needs must and, depending on whether the case is complex, it will take longer and it may take more than one meeting.
Newby said that the “traditional” IFA model is doomed. It is true that we have to adapt and that some people do not want to pay for advice but that is why more firms such as ours are offering execution-only services.
If a client does not wish to go thorough “the appalling business” and wants to do it online then they can do it through an IFA. This is outside the RDR remit, too, so the IFA would earn commission and it would be free for the client, who may even get a cut of the commission back from the IFA.
For those who have used an IFA, if they had a bad experience they would probably agree with Newby. Those who had a good experience will disagree with him and hopefully will want to stay with their adviser
Colin Jackson is director of Baronworth Financial Investments