Life in the post-RDR world has seen bias in regulated financial advice minimised more than ever; so much so that the value of advisers in the world of pension freedoms is truly huge.
That is great but there are still daily fishing hooks thrown at us that need to be navigated. The need to avoid being affected by various messages trying to infiltrate our brains like wriggly worms will not go away any time soon.
The huge billboard posters with first quartile returns splashed across them may be a thing of the past but the behavioural experts continue to attack us through a plethora of every day personal devices.
Now tired with focusing on past performance, take the expert fund manager bulletin with exclamations of predicting the future – which, of course, no one can. The content and headlines have all the tricks of the trade, filled with subliminal messages trying to make us think this is the go-to guy. This is the man.
“Interest rates cannot go down any further,” he cries. “You must invest here instead”. Bank of England governor Mark Carney seems to think they can and he is the one that pulls the levers. The long-suffering fund manager cries even harder.
Of course, the greater use of centralised investment propositions and investment committees helps to screen this noise out but certain things can still get through. And if not to us, then to our clients. They get infected by the contagious disease, which, if not careful, advisers could well end up pandering to and spreading further.
We only need to look at the dangers of the latest investment fads or the direction of markets purported by newspaper columns that know little about the future apart from the desperate need to fill space ahead of deadline. And then there are the sales reps looking after their own future bonuses, the wrap providers desperate to increase funds under management – the list goes on. Fighting the madness of crowds is not an easy game for advisers.
The Bank of England does not help matters by issuing forward guidance as if it knows what the future holds.
Hear too much “stuff” and the experts know advisers can suffer the same heuristic bias as our clients. We are not the daft bank adviser of yesteryear but nor should we have to risk our reputations by exhibiting overconfidence in making big calls on the next thing to do based on the noise. We should constantly be doing the most important thing: focusing on clients’ needs.
It is important we take a step back and challenge the carefully thrown dart that hits us between the eyes, otherwise we risk being zombies: alive but dead.
Mel Kenny is a chartered financial planner at Radcliffe & Newlands