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Dennis Hall: Why Paul Lewis’ advice analogy is flawed

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A few weeks ago, Paul Lewis had a pop at the advice side of the industry, using the analogy of buying a washing machine.

As much as Lewis wanted to shine a light on everything he believes is wrong with our charges, his article only illustrated the absurdity of an analogy that was stretched to the point of lunacy. It was not clever and if you have been around a while you might remember the equally tiresome analogy of buying shoes in a world where shoe salesman suddenly became regulated.

Just to make it perfectly clear, I do not sell washing machines (or shoes for that matter) and if I did the market has largely determined what I can sell a washing machine for. As a consumer I baulk at paying several hundred quid for what will undoubtedly become 80 kilos of scrap 10 years from now.

But would it serve any purpose to compare the cost of washing machines to something like art, for example? I know. It is ridiculous isn’t it?

Ridiculousness aside, let’s consider art for a moment. Damien Hirst (or more likely an assistant) paints a few coloured blobs on a piece of white canvas. He spends a few hours and perhaps 30 quid on the materials and then sells the blobs for anywhere between £30,000 and a £1m.

On top of that there might be the auction house fees, some VAT on those fees and Artist’s Resale Rights, which gives Hirst a royalty every time the piece is sold (even though he has not had to go back and touch it up).

By what stretch of the imagination is a few hours work and 30 quid of materials worth that kind of money? The scrap value of a washing machine is probably worth more than the canvas and paint cost new.

As it happens, I have got a spot painting, albeit a limited edition print. If I applied Lewis’s logic, what I paid for it should reflect time and materials. But it did not, so me and millions of other art buyers have been royally ripped off. Come on, Lewis, get on the case.

And that is the problem with someone who knows the price of everything and the value of nothing. When it all boils down to it, all I leave my clients with is a few sheets of A4 paper with words on it.

What is that worth? Less than a tenner? The reality is a lot of the product buying experience can be commoditised, whereas a lot of the work advisers do is as intangible as, well, art! We provide piece of mind while allaying fears.

We challenge, provoke and instil action where the easy option is to do nothing. We help provide certainty in an increasingly uncertain world, and for many we are the person they share their dreams and aspirations. So leave me alone Mr Lewis: I’m bleedin’ Michelangelo!

Dennis Hall is managing director of Yellowtail Financial Planning

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Comments

There are 9 comments at the moment, we would lover to hear your opinion too.

  1. Well done Dennis good article!

  2. Stuart Gregory 14th July 2015 at 6:50 pm

    Well said Dennis, but I’m afraid you’d be lucky to find a new washing machine that lasts any longer than the warranty period….!!

  3. Talking of sill analogies….

  4. Talking of silly analogies….

  5. The point of what I wrote was to try to get advisers to look at their model and think if it was appropriate, sensible, fair, clear, and, oh yes, not misleading. I’m sure a lot of them got that. And at least thought about it even if the answer was yes, yes, yes, yes, and yes. After all this time an autonomic defence of the status quo is not what I expected, especially from Dennis. I guess I’ll have to try harder.

  6. I think a better analogy would be:-
    You’re looking at an LG Washing Machine for £799
    I have an Independent Washing Machine Salesman who has researched to discover I can get a better model of this brand from his supplier for £499. He will also plumb it in for £14.97 (3%) and then service it every year for £2.50 (0.5%)
    And if I’m ever unhappy with the machine or the service I can complain to the Plumbing Ombudsman at any time in my life.
    Who wouldn’t take the advice option if this was the case.

    I’m not an adviser, but I can definately see the benefit of having one.

  7. Matthew Sedgley 15th July 2015 at 9:06 am

    Very good Eddie and Dennis, Paul has on this occassion missed the mark

  8. Paul, can we talk about talent rates and management rates and indeed journalist rates at the BBC as I am sure that many licence fee and tax payers would be very interested in whether there is full disclosure of these rates and benefits to the consumer.

    If we are talking about the clarity of charges, maybe you would like to publish your own remuneration package and any other payments from third parties. Or is it just financial advisers who have to give clarity to consumers?

  9. its time the BBC stopped wasting tax payers money and stopped paying Paul for his shambles of a program which mis-leads Joe Public most the time.
    The BBC should look at other more knowledgeable correspondents , and leave Paul kicking his tyre s

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