Over the past few weeks, I have been travelling the country on what feels very much like a campaign trail of my own. Unlike Messrs Cameron, Clegg and Brown, however, the big issues of the day I have found in meeting many IFAs at our regional roadshow events are more unified. The question on my electorate’s lips is, what does the future hold?
First, we all know the reality is that regulation will become tougher not softer. The FSA places a considerable degree of responsibility on the IFA and with this comes a significant increase in costs.
Listening to the feedback, the worrying news is there remains a small minority of IFAs who are looking at all the changes in the industry as negative and spending their time seeking methods of circumvention.
The main priorities for this group are to undertake the minimum regulatory requirements, avoid any more exams and get as much commission as possible before their world changes.
Good advice is not about trying to find some exotic product a provider has dreamed up to sell to an unsuspecting client. We believe the future for successful adviser businesses is in distinguishing which of your clients require a professional service – and are prepared to pay for it – and which would prefer to retain a transactional service. And as treating customers fairly prescribes, both groups must be given what they want.
Demonstrating your commitment to a long-term client relationship with a personal client agreement not only builds mutual trust but also provides a solid framework to support the adviser’s future. With this in place, the IFA can be more confident of building up sustainable income streams, focusing on the service and advice as opposed to just product selling.
Having 200 personal agreements in force with clients you are building trusted relationships with far outweighs the old model of having thousands of clients and just seeing what else you can sell them and then thinking that the business has any real value when you retire.
However, a business with a number of active agreements with clients who recognise there is a cost for advice and ongoing service, I would say, is really worth something.
Becoming a professional financial adviser through a transparent, consistent and trusted approach will ensure clients stick with you for years to come and will create a secure business worthy of future pride and aspiration. In this election, and with no political bias intended, the answer is obvious – vote for change.
Chris Smallwood is chief executive of 2plan Wealth Management