Being the helping soul that I am, I take the call and end up in a bizarre conversation. He wants to know if he could help me in looking after my clients in Manchester and its surroundings and kindly offers to split any resulting commission with me.
Good idea, I think, until I remember a slight problem with this offer – I don’t have any clients in Manchester.
He then suggests that he would be willing to travel to London to advise my clients to free up my own time. Creative thinking but not really very appealing to me.
However, I appreciated this chap’s willingness to go looking for new avenues of business and for showing initiative so I probed him further. “What do you specialise in?”, I asked. “Everything”, he replied, reeling off a list of products.
“And what kind of clients do you concentrate on?”, I queried.
“Anyone”, he responded, listing a range from first-time buyers to companies turning over tens of millions of pounds. This lack of direction was not looking good.
“OK, what makes you unique?”.”Nothing really”, came the disappointing response. “How’s business?” I asked, increasingly losing interest.
“About 30 per cent down but enough to pay the bills and put food on the table” was the dejected response. So, there you have it. An IFA who talks about commission, rather than rem-uneration, who sells everything to everyone, does it in no special way and then wonders why business is down.
By the end of the conversation, I had turned round the agenda by showing him that I could better help him by talking to his clients about the things we do that he does not such as creative tax planning.
But, here is the real issue – how would you have responded to those same questions? Read them again and be honest with yourself in your answers. If it were a client hearing those answers, what impression are you creating?
I genuinely applaud an IFA’s efforts to make a change and I just wonder how many others are not being proactive at all. Do these IFAs deserve to be put out of business by the FSA? Absolutely not. The retail distribution review, however, is about to destroy these livelihoods and thus disenfranchise a whole raft of society, denying them affordable independent financial advice.
The RDR fails to acknowledge a simple fact that the majority of the public simply will not pay fees for financial advice. Not that they don’t want to, they cannot afford to and will be forced down an inferior route of restricted advice.
Don’t get me wrong – I am a fee-charging IFA but, unlike some, I do not suggest that commission-based IFAs are inferior or less able, it is just a different model and each has a role to play.
Bhupinder Anand is managing director of Anand Associates