Scott Gallacher: This is the golden age of advice but poor practice lingers

Scott Gallacher

Since the introduction of the RDR we have finally started to be seen by most as professional advisers.

The insurance company salesman image may linger on for a while yet for some, but it still feels like a golden age for financial advisers and planners.

The RDR raised standards, reduced competition and started to change the public’s perception of us. At the same time, the continued bank crisis and record low deposit rates have forced people to reconsider their “cash is best” belief. Pension freedoms have suddenly, and completely unexpectedly, made pensions sexy.

These factors, coupled with the baby boomers reaching retirement age, means that, for most financial advisers I speak to, life is great and business is booming. I acknowledge the advice gap but I would suggest it is an issue for politicians and regulators rather than individual advisers.

Naturally, however, there are always some concerns. Current examples include short-term worries such as Brexit and longer-term fears about the supposed threat of robo-advice.

Brexit is primarily an investment worry, just like the Millennium Bug and leaving the European Exchange Rate Mechanism before it. It does not alter what we do or how people need us. In fact, it is probably good for advisers in the short term as it prompts a few more calls to us from people worried about the possible impact.

Robo-advice could be argued as more of an ongoing concern; however, I do not think it is really an issue for genuine financial advisers or planners. Robo-advisers at the moment are just reactive, whereas real people are time poor and want someone else to do the hard work.

Some are so reactive they do not even address the basic question of how much one should be saving or investing to achieve a good retirement, instead relying on the client to tell them how much they want to save.

Despite this being a golden age, however, there is no room for complacency: some advisers still need to raise the quality of their advice. At this point, I would urge readers to put down their pitchforks, since, if you are taking the time to read this, you are likely one of the good guys.

I probably have a slightly jaundiced view of other advisers’ work as I generally only see examples when clients are dissatisfied with their existing adviser and are looking to switch. No doubt those clients receiving excellent advice are generally happy, hence we rarely see examples of others’ great work.

But the work we do see from others is too often fundamentally flawed.

This varies from highly questionable investments at one end, to a complete lack of even basic tax planning such as Isas and capital gains tax planning. Unfortunately, I do not think higher qualifications on their own will address this issue, since I have seen plenty of examples of highly qualified advisers giving poor advice.

That said, on the whole we are a great force for good and have a great future. We just need to continue upping our game.

Scott Gallacher is director of Rowley Turton