Lee Robertson: Do we need to rethink long-term advice?


I got into a discussion with an industry pal last week about the nature of long-term advice, the responsibilities that brought and just how many financial planning businesses are unlikely (in their current form at least) to outlive their clients. As everyone would probably agree, the current spate of mergers, acquisitions and practice buy-outs is only adding to the problem.

Those of us who operate in the financial planning sector are quick to look askance at the advice offered by larger institutions, be they banks, vertically integrated firms or discretionary managers. We state loudly it is the financial planning, discipline and objectivity, as well as the long-term nature of our relationships, which deliver the real value to clients.

But if we are going to claim to be the stewards of our clients’ wealth and offer to work with them over the long term, do we need to re-think what we mean by that? If nothing else, the planning required and opportunities presented by the pension freedoms has dramatically extended the range and scope of long-term financial planning. Many of our clients’ children will now inherit wealth beyond property, as pension capital passes down to the next generation. These sums could be quite substantial and the responsibilities of good stewardship placed upon us as advisers are not inconsiderable.

While we may consider the advice offerings of other types of adviser somewhat inferior, the organisations they work within do have a natural advantage: longevity. Many of these institutions have been around for a long time and, despite some of their current woes, will be around a long time yet.

And it is not just pensions but also people, as my industry pal outlined in a very pertinent scenario.

Consider an adult child with mental health issues but who will almost definitely outlive his parents. He will need proper long-term financial care and assistance, possibly for decades to come. Do we run the type of firms that will actually be able to deliver it? Why would the parents appoint us and invest time and emotional energy in our services as their advisers knowing it is very possible we will not be around to assist the son just when he might need us most?

My pal is very complimentary of many firms and feels that the levels of service and financial planning offered by advisers is often vastly superior to larger institutions. But his question is, should they trade superior advice and service for a long-term relationship?

I am not entirely sure I have a satisfactory answer yet beyond the fact that, when I do eventually sell my business, I will sell it to a quality organisation with financial planning and client care at the core of everything it does.

The problem for the moment does remain, however. If we are offering long term, cross generational, financial planning to families we should be able to demonstrate that we are also in it for the longer term. Our clients deserve nothing less.

Lee Robertson is chief executive of Investment Quorum