The past year has seen a lot of change for financial advisers. But as the French would say, “Plus ça change, plus c’est la même chose” – the more things change, the more they stay the same. For some this phrase provides comfort, for others frustration. Similar to the Chinese phrase, “May you live in interesting times”, again this has the dual polarity of comfort and frustration.
Despite all the talk of change, why is it that so many consolidation plays simply leave the risk with the advisory firm and move the value to a third party.
This concept was at the core of the direct sales forces of the 1970s. At that time, the risk was created by advancing income ahead of business being written – what most of us would suggest was a loan.
Then we had firms helping new recruits buy out retiring salesmen, so back comes the risk, this time from the debt.
The value chain is not an indestructible or ever-elastic solution to all ills, the ongoing thematic review on methods of charging will, in due course, make bundled charging more difficult, if not impossible, in some circumstances.
Is it not amazing that we are now more than nine months into the year and the majority of the market has not made the move to selling the benefits of advice and instead remains fixed on sale of investments/products? This is evidenced by the ongoing allegiance to the bundled charge where the wrapper/platform is essential for its collection.
So if we now accept the value of advice is more than investments/wrappers/products, we need to communicate far better.
Some may say this is fluff and their firm is fine, but that just reflects a lack of alternatives rather than robust propositions.
As I write this I am in the US, attending the fee-only planner conference, and have noticed the trend in TV adverts promoting planning firms.
Their slogans include, ‘Experience the power of being in control’, ‘Maximise your reach’, ‘Good things come out of people talking’ or ‘Connect with the centre of your life’. These are the kind of slogans that get across the objectives of planning in a way the term holistic never can.
One session I attended yesterday was on the topic of female clients selecting planners, including looking at the change in comm-unication style needed where a client dies and their spouse/partner, who took little interest in matters financial, now has to step up.
I have purposely avoided making this about widows as I believe this is not an issue for widows alone. The speakers were actual clients who had been through the process with several false starts.
The session really made me ask how we could ensure that on a person’s death their partner would not feel the need to move to another firm.
When one delegate asked the best way to communicate, with words or pictures, he then made the mistake of asking if there was any better way of communicating.
He was speechless when the client responded: “Have you considered interpretative dance?” Perhaps we need an advice dance.
Robert Reid is managing director of Syndaxi Chartered Financial Planners