There is no doubt that most people need good financial advice. There is also little doubt that most do not get it, mainly because they cannot afford it or do not trust this industry. How to pay for advice is part of the problem. Is the solution a co-operative?
Don't get me wrong. I am not suggesting that we work for nothing. Like everyone else,I need to earn a living and I have no objection to being rich. But I am not prepared to give people bad advice to get there.I know there are many advisers who share this view.
Why is it that all that seems to matter in financial services is the commission?
Whenever I go for a post as an adviser, the most important question is “How much business did you do last year?”
This may well be why there are so many sole traders or small partnerships among IFAs.
However, they are under pressure from networks to meet minimum production targets too.
I know of at least one case where a single bad year, caused by illness, led to expulsion from a network.
I see many heads nodding in sympathy and saying: “It is all very well talking like this but we have got too face the commercial realities.”
Well, the commercial realities I have met include receiving 35 per cent of your first £30,000 while the boss runs an office in the most expensive part of London.
How does that help me to promote and build up my business in Bristol?
How do you provide an ongoing service when your company refuses to pass on renewals because ” it costs more than it is worth to pay such small sums”.
Personally I cannot see how it costs anything to pay regular small sums. Once it is on the computer, all you do is see the renewals being paid this month and hit one key. The computer does the rest. I have even found one firm that pays trail commission but not renewals because “they are on term policies and they are always being rebroked”.I wonder why?
I am sure that there has to be a better way of providing good financial advice to the public at a fair price.
My suggestion is that a group of like-minded advisers could join together and provide the services that a network provides for themselves by forming a co-operative.
This would give the advantage that they control it and if it makes a profit it is theirs not someone else's.
They would still be sole traders running their own business but with the economies of scale and terms from providers that bigger firms benefit from.
Before I entered financial services I used to work for a company whose philosophy was: “If we help our customers business to grow, then our business will grow too.”
That seems a pretty good way to approach the giving of financial advice – if my advice makes my clients better off, I will have richer clients and be better off too.
I should be very interested to hear from other advisers tied or independent who would like to explore the co-operative idea. My phone number is 0117 9425986 and my email address is firstname.lastname@example.org