Five minutes with…Julian Penniston-Hill, Intelligent Money CEO

Intelligent Money chief executive Julian Penniston-Hill talks demonstrating value for money and the future of one man bands ahead of Money Marketing Interactive Harrogate.

How can advisers show they are value for money?

By focusing on the value inherent in holistic financial planning, rather than focusing on investment selection. Many advisers are doing this already, or moving in this direction.

This is where all statistical evidence shows advisers who embrace this approach will be able to demonstrate value for money far more easily than those who focus on investment selection, as someone else will always have performed better.

The investing public are very much aware that they can easily access low cost passive investments and high performing managed funds without the need of an adviser. So the less an adviser focuses on the portfolio build and the more they focus on the value they can offer through proper financial planning the better.

What soft skills are needed for a modern adviser and why?

Empathy, understanding and connectivity with what each individual client is seeking. I am not speaking of suitability or investment selection, but about what the client wants from this relationship – as they are paying for it.

Time after time we hear from people who have met with advisers that insisted that their way of doing things is the only right way – and pushed each client to adapt to this, rather than the adviser adapting to what each client was seeking.

This is by no means a universal issue, far from it, but it is prevalent. Assessing what each client is looking for from their adviser relationship is a crucial skill for a modern adviser to connect with and then highlight the ongoing value they can offer in meeting the needs of each client.

Will one man bands continue to be a prominent feature of the market, or will provider plays into distribution take over?

Over the long term larger nationals and consolidators are more likely to win the game as things currently stand. However, embracing the points above could give smaller firms and one man bands the cutting edge that is currently beyond the giants.

The personal attention to detail as to what each client is seeking from their adviser relationship is far easier to deliver when an adviser is free from a set business model and the restrictions inherent within this.

Nationals and networks have taken advantage of the traditional mechanics of advice delivery, but they are the advisory equivalent of a limited CD collection in a live streaming Spotify world. The smaller firms should take this advantage by highlighting the fluidity of their approach in contrast.

Are profit levels across the advice industry sustainable?

We have seen increased costs and profitability across the advice sector since the implementation of the RDR. This was not to be unexpected when the control of adviser remuneration was removed from providers and placed into the hands of advisers.

I believe this was a positive development and that advisers should always be free to set their own charges without this being dictated to them, however we have only seen an increase and not one reduction in adviser fees and the new Mifid II disclosure rules are going to shine a spotlight on this.

Sustaining profit levels is therefore another factor that is going to require advisers to very quickly move to low cost passive investment strategies – should they wish to retain ad valorem adviser charging – and place the focus of their added value on financial planning rather than investment selection. People do not mind higher adviser fees when these deliver lower overall fees.

One month until Money Marketing Interactive Harrogate

What will the advice profession look like in 10 years’ time?

I believe it will be very different to how it looks today and has ever looked in the past, but taking forward the right elements of each aspect.

Historically, financial advisers sold products people would not have otherwise bought, as they were designed for life events people did not want to consider or focus on. This was no bad thing and left a generation very well covered.

Today, many financial advisers are in limbo. They still act at their best when exploring the individual circumstance of each client and highlight solutions that should not be ignored. Part of this process is, by its very nature, sales.

However, advisers have rightfully striven for professional acceptance. In my opinion they have gone about this in the wrong way by positioning themselves as investment, or wealth managers.

Those who move away from this and place the focus on their skills, qualifications and experience in financial planning are going to be tomorrow’s winners, regardless of their size.

Small, independent firms already have a head start in this as they are without the constraints placed on larger firms, but they need to move quickly as the large nationals are unlikely to miss out on growing trends. We are in a digital age that is not going to go away. Investment management is becoming increasingly more commoditised, whilst high standards of personal service is becoming increasingly rare.

Advisers who accept this and adapt their propositions accordingly will always remain best placed to prosper, both today and in the future.

The focus must be on what the adviser can add for each individual, not what each individual can add to each adviser by fitting into their mould.

Don’t miss out on seeing Money Marketing brought to life with an action packed agenda.

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  1. For once, that was worth reading and made a great deal of sense.

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