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INSIDE EDGE anne mcmeehan

“What would be your advice?” These are words used by someone seeking an

opinion. That is all. There is no implication that any resulting

information will be acted upon, nor is there any indication whether this is

a one-off enquiry or just the first of many such questions.

We can glean no understanding from these words alone as to the likely

quality of the advice that may be rendered. Similarly, the ability of the

person posing the question to interpret any response is also unknown.

That is the problem with advice in terms of the UK personal finance

marketplace. It is all rather too much of an unknown quantity to the man in

the street. Investors need to have a much clearer understanding of the

different types of advice available, from the “this is the one for you”

one-off transaction to the long-term ongoing relationship, from the fully

discretionary at one end of the service spectrum to information only at the


There is good reason to believe that the UK will follow in the footsteps

of US experience, where it has been shown that the more choice available to

investors, the more they seek guidance in their decision-making.

There are many factors involved. Advice is not simply a case of providing

an intellectual service. Much of the comfort sought by investors from

professional experts could be better described as psychological, that is, a

calm, wise head in perhaps difficult or confusing times.

It is therefore essential that UK investors should have access to

good-quality advice of a type suited to their specific needs.

Interestingly, while it has often been assumed that market developments

over recent years would increase direct business flow, they seem rather to

have been a contributory factor to a growing reliance on different sources

of advice.

Even sophisticated do-it-yourself investors are nowadays looking for a

combination of investment advice and centralised admin. Yet with honourable

exceptions, the overall quality of investment advice in the UK is not as

good as it could or should be.

Government, regulators and the industry have a mutual interest in the

future success of the advice market, especially if the Government is to

achieve its stated aim of enc-ouraging more people to provide for their

future personal financial security.

Yet the cornerstones of any successful relationship are trust and

confidence. Clients have a right to expect that fully competent,

well-qualified advisers acting on their behalf will bring additional

benefits to the personal financial planning process.

But it is important not simply to focus on the status of advice. It has

its price – and this should be immediately apparent to the investor. But

while both these elements have tended to be the focus of concentration over

recent years, they are just two components.

Advice is about far more than a single transaction. In most people&#39s

minds, it is about an ongoing relationship, where a recommendation to

maintain and hold an investment is every bit as important as a

recommendation to buy or sell, currently the only services addressed by the


Autif believes the maintenance of training and competence skills is an

important aspect of the advice process. Increasingly in the future,

advisers will need to possess greater investment-related skills as the emphasis on sales-based skills and transaction-based skills recedes. High standards o

f portfolio management and financial planning skills are those that will be

in greatest demand – readily identifiable added value at a known price from

a fully qualified professional.


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