I have found this very confusing for quite some time because every member of the public I meet tells me they mistrust IFAs and feel all they are doing is trying to sell a product to earn a commission – bit of a paradox that one.
When I read another article saying the public will not pay a fee to an IFA simply for them to select a product, it dawned on me that most IFAs and FAs are product peddlers, not financial planners.
The public will pay fees for financial planning. Why? Because this is when they appreciate what we do. This is when, as a financial planner, you show the client where they have financial shortfalls in their current arrangements and how they can resolve these.
When I explain to a client the reason I prefer a fee to commission is because I am being paid for financial planning rather than arranging a product, they completely understand. In fact, in many examples, such as pension transfers, the answer to their finan- cial planning could be to do nothing.
Imagine your GP being paid by the pharmaceutical companies to prescribe you with drugs – the more drugs the GP prescribes, the more money he earns. This is, in effect, how the system works for the bulk of the UK’s financial advisory community. If we drew a parallel between the pharmaceutical and insurance companies, I am sure we would know where their vested interests lie.
So the next time a member of the public is in front of you, try thinking like a financial planner (GP) not a financial adviser (IFA).
Chartered financial planner
Tony Slimmings Ltd