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Crossing the borderline

There are times when writing this column becomes an exercise in serendipity. A classic example came this week, when I received a call from Saran Allott-Davey, a financial adviser who runs Heron House Financial Management in Newport.

I had never before met or spoken with Saran (I hope she does not mind me using her first name) but I had heard of her. She is a multiple award-winning financial adviser and has an excellent reputation among her peers. From time to time, I had read quotes from her in the national press, so I felt rather flattered that she should want to talk to me.

The background to the conversation was a talk she was putting together for one of those self-styled leaders’ summit meetings, so-called because generally they are neither attended by genuine leaders, nor do they represent a true pinnacle for those who actually go to them.

But in Saran’s case, what was initially billed by her as a five-minute chat turned into a 20-minute discussion on various financial planning strategies. Her starting point was a recent article in Which? magazine which discussed financial coaching as distinct from the more traditional areas of advice that most IFAs specialise in.

This is an area of work in which I have gained some experience over the years. A number of other financial advisers, including Saran at Heron House, also offer coaching as part of their overall financial planning for clients. Such a strategy only really works if you are fee-based. After all, coaching does not necessarily involve selling a financial product but managing your finances better. Ironically, an effective coach can help a client save many thousands of pounds over a period of, say, a decade, so it is a worthwhile offering.

But what Saran was interested in discussing was the relationship between coaching and financial advice, as well at the borderline between full-on financial planning and meeting the needs of a client who comes to you with just one problem to solve. She has discovered that it is very hard to separate one from the other.

For example, if you are looking at a person’s overall spending and discussing how they can budget more effectively, it is perfectly sensible to help them by looking at things like their electricity and gas bills or whether it makes sense to spend £80 a month on gym membership when they never go there. It may also involve looking at things like credit cards and savings accounts, as part of a process of wringing as much as you can out of their money.

The difficulty lies with cross-over areas such as life insurance or mortgages where they may have products that are uncompetitive. Someone who is not regulated by the FSA is unable to give advice in these areas.

The way I approach this issue with clients I have spoken to is to look in detail at the financial products they have, carry out some rudimentary research using various search engines available on the internet and then prepare a report which couches any comment I make with phrases like “on the face of it” or “it would appear that”. I then recommend that the client should seek out an IFA and, in the case of car and home insurance, a broker or price comparison website to look into these issues further.

For Saran or any other financial planner worth their salt, this is potentially manna from heaven. Not only are they picking up a fee for the additional coaching work they offer their client, in some areas there is also the prospect of additional earnings from the work they do by switching him or her to more competitive products.

But what happens in cases where the client is not looking for anything other than a quick review of a particular issue, for example, investing in a child trust fund? As far as the coach is involved, that is an area for the adviser.

An adviser could almost certainly justify a relatively small one-off fee for this advice because the process involved does not involve a full fact-find. Apart from anything else, the child trust fund is in the child’s name, not the person making the investment.

The situation gets more complicated if you are being asked to focus on one area by your client, such as making use of that year’s Isa allowance. Is it strictly necessary to carry out a full review of that person’s finances? Strictly speaking, you should, in my view, but that will lead to significant costs for the client, which militates against them wanting to seek advice.

I do not have an answer to these conundrums. Apart from anything else, they form part of the complicated mosaic that makes up people’s lives, neither falling into one camp, nor the other.

Yet regulation constantly tries to separate each area into different activities, all needing different methods of intervention to make sure consumers are not harmed.

I wish Saran well in her talk. I would certainly be interested in your views. It is only through exchanges such as this that IFAs can move forward.

Nic Cicutti can be contacted at


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