Should IFAs advise on school and university fees planning? This may seem an odd question to put to an IFA as there is such an obvious answer. However, to address the issues, I have put on one of my other hats as a father of children aged four and two.
With the eldest already at a private junior school and with ambitions to put them both through the private sector, not to mention university, my wife and I find ourselves in need of help. Around £150,000 cash would be about right. If any readers care to contribute, they can contact me via the editor.
Confronting the grim reality of the costs involved, it dawned on me that I could not answer many of the questions which my wife was throwing at me. Our thoughts turned to seeking independent advice, so we contacted a number of specialist IFAs in education expenses planning.
The results were disappointing – slow responses and no answers to our tricky questions about how much we needed to save to cover different permutations of private and state sector education and what the effects might be on lifetime cash flow and our financial security in retirement. Our conclusion was that we badly needed an IFA but some IFAs appeared overwhelmed by the complexities of the job. Our planning requirements seemed to be too complicated and/or time consuming.
This picture has recently been confirmed by talking to a well-known specialist firm, the School Fees Partnership. It does not give investment advice but tries to find IFAs to take leads from anxious parents. Although it knows some very good IFAs, it cannot find enough around the country both willing and able to handle them.
My wife and I still need answers to our questions. So, in search of answers and to meet the obvious pent-up demand in the marketplace for school fees planning, I have set about designing a calculator and analysis tool for a new Towry Law service (not PIA regulated, by the way). If it is good enough to answer all my questions, not to mention my wife's, it should be good enough for all those other anxious parents.
The issue of PIA regulation is interesting in itself. Rumour has it that the FSA is taking an interest in school fees planning and is even contemplating making IFAs provide clients with extensive information on the total costs involved before they are allowed to arrange investments for them. Clients are then less likely to be misled into believing they can afford their ambitions for their children. If they go ahead, at least they will have been warned and can make an informed choice about the allocation of family resources.
If the rumour is correct, as a parent I am encouraged and as an IFA I regard it as a challenge to drive up standards of advice which I and Towry Law gladly accept.
Looking at the original question from another angle, who else apart from IFAs might give advice to parents? Their accountant? Their bank manager (hands up whostill has a real one rather than a call centre operative)?
Maybe. But why should they be able to give better advice, particularly answering those awkward questions, than an IFA? My considered answer to the question, as a parent and an IFA, is the same – yes. But I believe the IFA community has some hills to climb before parents get the service they need.
I believe Towry Law has cracked a major part of the IFA's problem with its new calculator and analysis service. If anyone is interested in using it to help their clients, let me know.
David Ainslie is consultancy services director at Towry Law