The retail distribution review is forcing a lot of financial advisers to re-evaluate the very fundamentals of their businesses but lifestyle financial planner Paul Armson says he has always been RDR-ready.
Armson is chief executive of new venture Alternative Financial Advisers, a marketing and training group to help IFAs become lifestyle financial planners.
He says: “Alternative is about promoting the fact that your advice should not be about money, it should be about the client – the money is just a means to an end, so the service and the fact find should be about getting to know your client, finding out what they want to achieve and then help them work out how to achieve that. That is lifestyle financial planning.”
Armson started his professional life as an apprentice carpenter, reaching the heights of Apprentice of the Year 1976, but it was the lure of fiscal rewards that led him into financial services.
“I did not know what an IFA was, I thought I was just going for a job at a firm that helped people plan for their future, helped people become financially independent and helped people retire early. I thought everyone would want that service and I fell for their proposition.”
He began training as a financial adviser and right away he saw his role differently from his colleagues.
“Right from the start it was not about selling – I honestly thought my job was helping people get what they wanted. Even in the same firm, we had advisers who would sell their clients the bare minimum pension investment and they would just take that. To me, that made no sense, it is not going to help anyone.”
Armson quickly realised that the best way to sell people his service and products was to sell people their desires. Although he did not know it, he was already approaching the job from the perspective of a lifestyle financial planner. “Everyone has a grand idea. The definition of a financial planner, in my head, was to show the client what that grand idea is and then help them work out how to get that. This approach helped me excel.”
But Armson did not know he was lifestyle financial planning explicitly until he met Paul Etheridge, founder of the Prestwood Group.
“When I came across Paul’s message, it was the missing piece in my jigsaw. When I began to use his software, my business levels rocketed but, more important, I was able to show my clients where they were heading and what their future was about.”
At Alternative, Armson uses marketing seminars and training days to teach IFAs his lifestyle planning proposition that is split into three stages.
“The first stage is life planning – finding out what they want to achieve in their lifetime. It is a fact-find about the client and should be the most important part of our job. Stage two is financial planning – when you show the client what all the facts mean and where they currently stand. Only then, if the client needs a financial product implemented, you go to the third stage of independent financial advice.”
He continued to practise as an independent lifestyle financial planner for 23 years until he realised his own dream.
“If you are talking about planning lifestyles you should have planned your own lifestyle, so my intention was to retire early and at 45 I bought a yacht and decided to work part-time.”
But while on a sailing trip, a client convinced him that he should try to encourage more IFAs to practise lifestyle financial planning, so he went to Prestwood in 2007 and helped them develop Truth software, a programme that works alongside the lifestyle process.
From 2007 until this year, he has worked as a marketing consultant for Prestwood, helping to market the software he helped develop.
But after three years, Armson wanted to get involved with the promotion of lifestyle financial planning.
“The problem is the public does not know advisers can do this, they think we can only sell product because that is all we have done in the past through commission. Alternative members do not do that. They implement product certainly, but they sell the client on the need to take financial planning seriously, on a fee basis.”
Armson firmly believes it is this “backward” advice process that sets lifestyle financial planners out from the crowd and makes them most likely to succeed after the RDR in 2012.
“Most IFAs spend all their time in the third part of the advice process, selling product, but the client only appreciates the first two parts of the job.
“It is those parts that should be paid for, whether a product is implemented or not. The whole point of the RDR is that it will give advisers the freedom to focus on a service that is worth paying for and it justifies why they are getting paid.”
Armson passionately believes that lifestyle financial planning is the way forward for all financial advisers.
“IFA value is creating a meaningful relationship with your client to understand where they are heading in their lives. It needs to be the adviser doing that because they cannot do it themselves. That is where we add most value, and that is why you should be paid independent of a product sale.”
Born: Staffordshire, 1959
Lives: Hagley, Worcestershire
Education: Stourbridge College of Technology, Advanced City & Guilds in carpentry & joinery, HND in building studies. ALIA Dip, FPC 123
Career: 2010-present: chief executive, Alternative Financial Advisers; 2007-10: marketing consultant, Prestwood Software; 1984-2007: sole trader, Falcon Financial Solutions; 1982-84: adviser, Financial Planning Services
Likes: Sunshine, sailing, mountaineering and people who do what they say and say what they think
Dislikes: EastEnders, hoodies, scroungers and people who drop litter
Book: Illusions, The Adventures of a Reluctant Messiah by Richard Bach
Album: Hymns to the Silence or Astral Weeks by Van Morrison
Film: Dead Poets’ Society
Career ambition: Make a contribution to helping advisers move to a lifestyle financial planning model
Life ambition: To go beyond ’mind’, to wake up and to be truly present
If I wasn’t doing this I would be: Sailing around the world