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Mixed message

In the first article of a series, Sesame head of propositions and commercial development Alastair Conway puts his view that IFAs need to rethink just what clients want

I was an IFA for 17 years up until late 2004 but it was a conversation with my nephew, shortly after joining Sesame, which hammered home to me how the market I have been working in needs to evolve following depolarisation.

The scenario seems straightforward enough. My nephew and his fianc裬 both in their early 20s were looking to buy their first house and were in need of financial advice.

Yet it struck me that for a combination of reasons, maybe independent advice was not the most important issue for them.

What they needed most was an adviser who could keep it simple. They were struggling with whether their mortgage should be fixed or discounted, let alone how long the term should be and what sort of protection products were needed to go with it. The most important thing was getting an advice experience they would want to repeat.

From an adviser’s perspective, going into great depth and researching the whole market was not going to provide the real value in any relationship with them. They needed an adviser with the right mix of knowledge, experience and the ability to help them understand their choices.

IFA is a great product and one which I firmly believe is essential for the long-term success of our industry.

But we need to ask ourselves whether we have damaged the IFA brand as a result of trying to sell the concept to everyone.

After all, there are 32 million adults who have not taken financial advice and perhaps, on reflection, the gap between IFA and tied advice was simply too big for the polarised market to ever work.

We also need to consider how the market has changed over recent years, particularly with the rise of 1 per cent charging and open-architecture products.

The choice of the product wrapper has become far less important than the underlying funds chosen at the end of the advice process.

The real value of an IFA is surely about the independence of the advice rather than the product selection. It is the independence of thought when considering a client’s needs,which matters most to them.

We need to target independent advice at the people who want to deal in that sort of environment. The more experienced or educated consumer will still seek the IFA badge but we need to accept that there are other people who are looking for a simpler process when buying financial products.

In an increasingly consumer and marketing-driven society, some people feel more comfortable having a choice of leading brands rather than every brand available in the market, many of which they have probably never heard of.

Maybe it is time we spent less energy trying to convince people they always need to talk to an IFA and accept that what they really want is just to talk to someone they trust.

After all, the most important issue is that consumers understand what is presented to them for their benefit and for advisers.

I appreciate this may be uncomfortable reading for some but in an industry where advisers’ revenue is falling and administration increasing, the industry can only move ahead if we challenge traditional thinking. If we follow this course, we may just find our lives get easier as a result.

What matters to me is to see good quality advisers continue to thrive. I want advisers still to be out there in two years time because that is the only way for the industry as a whole to deliver much needed quality face-to-face advice on a daily basis.

It must be about the type of advice that people want rather than us imposing the type of advice that we believe they should have.

As I have watched the market evolve over the past few months, it strikes me that there is now a range of business models that advisers can adopt. Whether it is whole of market, IFA, multi-tie or some form of combination (hybrids) the options should be explored.

I certainly think that most adviser practices would benefit from looking at their current businesses to see whether there is another way they can begin to deal with their clients.

A thriving financial advice industry is vital for advisers, consumers and the economy. If depolarisation helps us to achieve this, then we should embrace it rather than feeling threatened by it.

Now is the time to be bold and have faith in the fact that what consumers are buying is the adviser and not necessarily the badge they have when giving advice.

When starting out as an IFA, I soon realised that people bought me rather than the product I recommended.

What clients value is to be able to pick up the phone and talk to you in confidence about financial concerns, issues and challenges. It is the trusted relationship that makes this possible. Recognising and getting to grips with that concept in these changing times will enable advisers to examine their businesses rationally and develop in a way that secures


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