One of the challenges of any regular column is coming up with a suitable topic to discuss. Most weeks, the issue is fairly obvious and you are responding to something that has happened in the outside world.
Once in a while, however, struggling to come up with a decent idea, you pop over to the FSA’s website for some inspiration, pay a quick visit to a few online rivals to see what they are writing about, check out the financial ombudsman in case there are any interesting announcements, and trawl through every press release you can.
When that happens, occasionally you stumble across someone else’s idea for a column that strikes you as blindingly good, head and shoulders above the rest. I had that feeling last week, when I popped onto Money Marketing’s website and saw my colleague Alan Lakey (I hope he doesn’t mind me calling him that) had penned a column entitled “What do the public want from the RDR?”
Now, that is a brilliant topic to write about and the views of IFAs are important in that regard. After all, if they don’t have some insight into the issue, who on earth does? So the 40-odd responses to Alan’s column were also fascinating and revealed a great spread of views on the subject.
However, it also struck me that there was some confusion in terms of what the headline asked and the way in which the responses were then described. For a start, what the “the public” wants and what “my clients” want are not the same thing.
The first implies a reasonably rigorous attempt to assess the views of a representative sample of consumers, the latter risks being seen as replies to leading questions from a carefully selected group of people who already empathise with your approach to financial advice and can be relied on to deliver the answers you want, not that I’m suggesting for a second that’s what happened in Alan’s case.
For example, Alan and many of those who responded to his column argues that most people do not want a holistic financial planning experience, they prefer to talk to a financial adviser about one very specific financial need at a time “Most consumers do not want a systematic exploration of their finances because it is time-consuming, invasive, somewhat boring and, more pertinently, they do not want to pay the fees necessary for such analysis,” he says.
He may have a point there. Discussing your long-term financial plans with an adviser can seem time-consuming and boring, especially if you have not done it before, if you are frightened about the process itself for any reason, if you don’t believe it will deliver any worthwhile outcome and if you suspect that any gains will be outweighed by the costs.
It is also true that the cost of a two-hour financial review, followed by several more hours of research and a further meeting to explain the outcome of all this work can seem dauntingly expensive to many.
Yet my own experience tells me that many people do not necessarily know what they want or that what they want is actually highly contradictory. For example, when I first became a freelance, one of the services offered through my website was “money coaching”, an attempt
to help people spend money more wisely.
Until I gave up this particular area of work many of the cases coming to me were far too harrowing my own impression would have been first that most clients, particularly the poorest, were more than willing to pay a one-off fee. Second, they were definitely very interested in a holistic look at their finances, if only because most of them had reached the stage where it was blindingly obvious that was exactly what they needed.
The conclusion I draw is that actually, it is not just so-called HNWs who want a root-and-branch look at their financial affairs but also the least well-off. So the question then comes back to why it is that those on median incomes don’t want the kind of advice that Alan and many of his colleagues say they don’t.
This is where it gets tricky. As I implied earlier, it all depends on what questions you ask, what outcomes you promise and then deliver on.
Most significantly, if your clients have long become used to the notion that financial advice is a process akin to buying a car or going to a doctor with a backache, where you sort out that issue and don’t go back again for another year or two, it is hardly surprising they will tell you want you want to hear.
Many years ago, when I was a writer on a local newspaper, our MP used to send us press releases in which he repeatedly told us how his own keenly expressed and very trenchant political beliefs tallied with those of his constituents, whom he regularly asked for their opinions.
It subsequently turned out that the MP’s “surveys” were based on a “sampling” of commuters’ views on the train back to his constituency every Friday evening. He was most put out when I suggested that they might not be wholly representative. I hope Alan doesn’t mind to much if I suggest the same to him.
Nic Cicutti can be contacted at firstname.lastname@example.org