I received a new enquiry by email this morning. It contained a statement from the sender as follows: “I have spoken to a number of advisers but I feel they are trying to sell me products rather than give me impartial advice. What I want is some proper advice for which I can pay a fee with no pressure being put on me.”
The sender provided some further background information. He is 55 years old and wants to retire as soon as he can. He has a medical condition that may shorten his life expectancy and, while he has two children, he has no spouse or partner. Among his arrangements is a deferred defined benefits pension.
On the surface, he looks like someone who could get real value from impartial advice, and he is willing to pay a fee for that advice. Why, then, does he feel the advisers he has spoken with are not impartial and that he is being sold products?
It could be to do with the adviser proposition. If the proposition includes the fact the client only pays if he buys a financial product, you can see why he feels advisers are trying to sell to him. This may also explain why he feels they are not being impartial. After all, what if he does not need a product once the advice has been formulated?
Experience tells me many clients are looking for something much more expansive than an adviser who is going to choose the best financial product for them. They recognise financial advice is something much bigger than that. This is not to say product selection is unimportant, by the way, just that it comes pretty far down the list of client wants when they engage with an adviser.
So, what does proper advice look like to someone like this enquirer?
Proper advice will include looking at his situation in the round, building a plan that encompasses all of his existing financial arrangements (not just his
pensions) and seeing if his needs and wants can be satisfied by what he already has.
He is certainly looking for the answer to one very big question: can he afford to retire soon?
He needs to be presented with the facts and shown that he can either retire now with a reasonable prospect of not running out of money, or that he needs to save more. Or perhaps lower his expectations about what is possible.
He needs to understand the advantages and disadvantages of any course of action that he takes, as well as any risks involved. It does not follow that he needs a new financial product, although the planning process will uncover if he does. As far as his DB pension is concerned, we all know there is a lot of advisory work to be done there.
I think this prospective client may well have been put off by contingent charging. Perhaps he feels this is why the advice that has been propositioned to him so far is about product and not impartial.
Nick Bamford is executive director at Informed Choice