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Womack: Why I’m becoming an IFA

Stephen Womack MM blog

There have been some raised eyebrows in the past few weeks since I announced that I will be leaving the Mail on Sunday next year with the aim of qualifying as a financial adviser.

Some advisers have been very supportive. Others have questioned my sanity. So why do I want to make the transition from journalism to advice and why is the time right to change?

I started covering the financial services sector in 1993, working as an investment writer for a weekly title aimed at the then infant IFA sector. In the years since I’ve seen some of the very best and the very worst that financial advisers can do for their clients.

It is heart-warming to hear examples of prudent advice that has paid off. I recall interviewing one lady in her mid-40s who was bowled over by the £370,000 she received from a string of critical illness policies after a medical scare. The money paid for her husband to care for her through a period of convalescence, meant her mortgage was repaid and that there was a secure future for her three young children.

Similarly it was heart-breaking to have to sit in a front room with a couple in their 60s, explaining that the paperwork their IFA had given them for his ‘unique investment bond’ was entirely bogus. Their £500,000 of life savings was gone in a fraud.

Between these two extremes, there has been a slow but steady evolution in the professionalism of advice and advisers.

Some individuals and firms have been ahead of the curve, voluntarily pushing themselves to higher standards. Others have lagged behind, kicking and screaming. But the trend towards better trained advisers offering a more clearly-defined service has been inexorably higher.

With RDR next year, the selling skills that have always been part of the process will now have to be turned towards selling an adviser’s service and their knowledge, rather than particular products.

Look at the opportunities for advice out there. The cradle-to-grave support of the welfare state is being steadily eroded. Employers can no longer afford the crippling costs of DB pensions. Individuals are being asked to take on more responsibility for their own futures and to tackle ever more complex financial challenges.

More than seven million people will reach state pension age in the next decade – the majority retiring with some meaningful assets behind them, needing help husbanding these over the rest of their lives. We’re seeing families facing tough questions of how they balance wealth across the generations, wondering whether to use savings to support their parents in care, or their children through university and onto the housing ladder.

And all this is taking place against the backdrop of volatile, uncertain financial markets and a rapidly changing global economic order. To me, that sounds like a world crying out for long-term financial planning delivered by advisers who care about their clients. And that sounds like a world that I want to be part of.

Am I naïve? Possibly. Is there a lot to learn? Undoubtedly. Do I underestimate the burden of complying with a regulatory system that changes its colours more frequently than a chameleon? Almost certainly. But I still genuinely believe the future is bright for professional financial planning.

Stephen Womack is personal financial correspondent at the Mail on Sunday

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Comments

There are 39 comments at the moment, we would love to hear your opinion too.

  1. This is the longest professional suicide note I’ve ever read.

    I implore you not to do this, please don’t. If you have a family and commitments, please, please, please stop at the Mail on Sunday.

  2. You are stark raving mad !

    Still it’ll make a good story when you go back to being a financial journo !

    Good Luck

  3. He’s fortunate to be able to go back to becoming a hack. I can see the title now “why a year of being an ifa nearly bankrupted me”

  4. Mohammad Uz-Zaman 10th December 2012 at 9:03 am

    Richard Bishop – why would you say it is professional suicide? Im intrigued to learn about your criticisms as im training to be an ifa too…

  5. Stephen – You are spot on, this is a fantastic time to get involved with financial planning as consumers are crying out for good quality advice from advisory firms who are qualified, professional and ethical.

    However, as I’m sure you will realise there is a big difference between proper financial planning and just arranging investment products. Even the FSA don’t quite get it and probably never will.

    As a journalist, perhaps you can continue to fight our corner in respect of increasing levies to pay for the compensation schemes and ever increasing PI insurance. These are the main threats to a good quality firms existence.

    I wish you well.

  6. Good luck Stephen, I wish you well. We need more IFA’s with your insight to further improve our Professional standing. Just don’t look at journalism as your fall back option….

  7. I know of another ex editor of a rival publication who thought the transition would be easy.

    He’s now back doing journo stuff.

    Paul, Greg & Nicole – can we expect you to start an MM Advisory Services any time soon?

  8. Stephen, I don’t disagree entrely with your view of the potential for the provision of and need for good quality advice – however your utopian vision will probably occupy a very small percentage of your time as an IFA, unless you pay a lot of time for someone to do some of it for your (whilst you remain liable). Have you considered arranging PI insurance (allow a day just to complete an application let alone pay for it). Appalling customer service at life offices and banks, constant ineffective but endlessly time consuming and expensive meddling from the regulator, life long liability without a crystal ball, more red tape than a Christmas bash at the Kremlin, I could go on and on. My daughter would be very capable of taking over my business in a few years, she would be a good, intelligent and ethical adviser – but I would be failing completely in my duties as a father to let her anywhere near it.

  9. You are absolutely spit when you say the opportunities are there buy they have always been around. It’s just that now we don’t have a regulatory system to support the IFA and the government has done everything possible to destroy the IFA and to sim it up YES demographics are changing but who has the confidence to invest in the fraudulent markets. You won’t survive and this comes from a successfull IFA who got out 3 years ago after 22years in the industry. Good luck anyway.

  10. Stephen (and anonymous newbie at 09:03am) – there ARE still some advisers who love what they do – they delight in the highs of a job well done and despair each time they meet the clients who have been badly advised, or defrauded.
    And yes, they too are frustrated if and when the regulator makes it unnecessarily complex or costly for them to get on with the business of advising clients and helping them plan their financial futures.
    But, welcome!! Good advisers always welcome more good advisers joining them – the more of us the merrier!! There’s more than enough work to be done and we all, even the nay-sayers and doom-mongers, have much to gain from the enthusiasm and professionalism and commitment of new entrants.

  11. The reason we’re saying don’t do it is we actually mean ‘don’t do it’. If you have a well paid job don’t make the mistake of changing positions now until at least you’ve seen the full effects of RDR and where the FSA are taking us to next. Now is not the time for someone to change careers and especially not into financial services. End of.

  12. @anon 9.03 – Go do something else. Being an IFA is a dying and expensive industry. Read my last blog for the reasons.

  13. @James is spot on.

  14. If there is one financial journalist who I would back to become an IFA/financial planner it is Stephen. He is meticulous in his work and passionate about financial services. He will be a force for good in a sector of the market that does so much good for people.

  15. Can I have your job at the Mail on Sunday because I fear that there is little future in being an IFA.

    IFA’s are completely uninvestable because, although we have a first class offering and there is huge demand for what we do, the regulation is so severe, retrospective and plain mad that making a fair living is becoming almost impossible.

    I wouldn’t let my sons become IFA’s and I would advise you not to either.

  16. Stephen, you are either the greatest visionary of our time or as mad as a box of frogs.
    It is not for me to say which as I have been in the Industry a long time. lmao.

  17. This could be the best thing you have ever done or it could be the worst thing you have ever done. If you were coming to this straight from Uni, i think it certainly a risk worth taking, but like James, leaving one secure job to come in to this NOW of all times, i think is unwise. Waiting 6 months until the dust settles appears more sensible.
    However if you are yet to finish your level 4, then I woudl suggest doing your studies whislt still working as a journalist and only hen starting as an IFA.
    Good luck anyway.

  18. Nicholas Pleasure 10th December 2012 at 12:14 pm

    Don’t throw it all away…

    There is a future in being an IFA but we need to wait until the car crash of 2013 is over with.

    My optimistic nature suggests that once government sees what the FSA has done it will put the FCA on a much shorter leash and by 2015 or 16 we might have a regulator that regulates and polices our industry in the spirit of natural justice, rather than one that wishes to micromanage every business and has a view of law and justice that would sit quite comfortably in North Korea.

  19. You might as well sign your own death warrant Stephen. Please, please reconsider.

  20. There are some incredibly negative people on here! But also some who are very positive.

    Seems to me some IFAs have adapted to the “new world” rather better than some others…

  21. Mark, consider this before you make this transition.

    1. You will be held personally liable for all advice you give and if you make an error, it could cost you your job, your home, your family and you could end up a bankrupt if you cannot pay compensation to a client who made a succesful claim against you for loss as a result of your advice.

    2. No matter how competent, diligent or prudent you are, we all make mistakes and iFAs do not have the benefit of protection under the law.

    3. You will be regulated by people who do not even have the basic level of qualification you will have to achieve and maintain through CPD

    4. Your regulator is unaccountable and not answerable for any errors it makes.

    5. You will be made to pay FSCS levies for compensating clients who lose even if you have never recommended such products as have generated their claims.

    6. The costs of running your business and FSA fees is out of control and not limited by reference to any indexation, so the regulator can charge what it wants and if you do not pay, you lose your registration, your job, your income and possibly your home and family life.

    7. You will never have control of your finance ever again as you will not be able to plan for the costs of regulation, FSCS levies and FOS awards.

    8. You will love what you do for clients and they in turn will respect you for your professionalism, until the time you make an error, which results in having to pay compensation.

    9. You will have to pay for others mistakes in the ever increasing costs of and restrictive covenants of PI insurance.

    10. You will probably have to work unsociable hours, negotiate with clients as to how much you should be paid for your services and of course the final downside of this business, when you come to sell it and try to retire, it will, due to FSA changes in the future, be rendered totally worthless as a saleable asset, consider what has already happened in this industry, people with 30yrs under their belt are finding the value of their business as a saleable asset has been depleted due to the commission ban and the changes concerning legacy payments of commission is being made unworkable.

    You will end up totally stressed, very frustrated and probably divorced if your family cannot handle you being totally focused on one aspect of your life to the exclusion of all others.

    The need to earn money to pay for all the ridiculous costs of a regulator which has no interest in enabling you to do your job, but will put every obstacle in your way to trading freely and profitably.

    I have been in this industry for nearly 28 yrs, 22 as an IFA and wish I had never bothered even though I have achieved a good degree of success, which has been destroyed by faceless people determined to relegate the provision of IFA services to the general public, to the waste basket of life.

    Don’t do it !

  22. Ned Taylor – Excellent comment and spot on.

  23. Succinctly put Ned.
    You have been warned Stephen.

  24. You may be committing professional suicide but on the plus side, it’s still infinitely preferable to writing for the Mail!

  25. I preferred it when you were a singer Mr Womack.

  26. Stephen
    Your own paper yesterday had an article regardind North Korea
    Last paragraph reads’these poor people simply keep their heads down, stay silent and pray that they and their families are lucky enough to be left alone ‘
    The article could have appeared in the Money Mail under the heading’ how the FSA treat IFAs’
    Assuming you are still mad enough and have a very, very understanding wife then go ahead but move all your assets into you wifes name because sooner than later the CMCs will be on your case

  27. Good luck Stephen – it will be a steep learning curve but if you stick it out it will be rewarding in the sense of achievement you will feel.
    Lots of hurdles to cross and it will make you realise how difficult a job it can be.
    Lots of negatives but also lots of positives.

  28. To Stephen Womack

    First off let me welcome you to the ranks of the IFA community and I hope that you remain confident and with a bright outlook the same as myself.

    So many in our industry will tell you that the world is coming to an end and that the industry is dead when in fact our industry has plenty of opportunity and for those people with high integrity and good skill levels it can also be a lucrative industry.

    You can either look at financial services like the man who went to Africa for the first time selling shoes seeing that nobody that actually wore shoes and thinking that there was no business in Africa. Or you can look at it as if nobody in Africa is wearing shoes and I can sell to plenty of new customers.

    RDR is very much like that, many in our industry will say that people are not willing to pay for advice when in reality we have over 80% UK population with income shortfalls in retirement and a welfare state that is totally ill prepared to provide for people in times of disaster like death of a breadwinner. So I see opportunity rather than some of the doom mongers on this site and I welcome you to the ranks of the IFA community.

  29. @ Peter – In the long term, you may be right, but unlike in Africa, you can’t make a killing in the period that RDR will be a mess, so for a new entrant, it could be wiser to stand back for 6 months and then enter once the way is less foggy.

  30. @Stephen

    I realise that many of the comments here have been negative but the true beliefs of so many good IFAs should not be dismissed lightly.

    This job now requires more resilience and (as Harry Katz would say) downright bloody mindedness than ever before. Being an IFA will always be interesting, but is no longer a lifestyle choice.

    You start with a blank canvas which gives you advantages and problems. The main advantage to you is a lack of baggage – both from a business and a regulatory point of view.

    No hindsight reviews from the FSA, no complaints managed by cynical CMCs, no back book to manage with the detritus left by useless product providers.

    No comfort blanket of renewal income garnered over 20+ years. No client bank to nurture, sustain and earn from. No industry hardened staff.

    Cleft stick? Probably.

    Good luck, I wish you every success.

  31. Ignore Richard Bishop and the other professional whingers here Stephen.

    If they spent less time trawling stories on this site for things to moan about and more effort working productively, maybe their business levels would rise accordingly.

    Or perhaps they’re just not very busy…

  32. @ Mr Womack, give it a go and see what happens.

    The Business is all about 3 things, great clients, great clients and yes great clients after that everything else sorts itself out after a battle.

    There is gloom in the sector and we all feel it, unaccountable meddling regulators, ripoff merchants giving us all a bad name, unemployed lawyers wanting a fee and oh yes claims companies. not to mention the RDR, poor admin and oh yes dodgily marketed products.

    My advice is get the clients and always remember its about the Clients.

    PS to Richard Bishop – when is your next article? I love a heated debate.

  33. To those posting stating there are negative IFA’s on here. Seriously, what do you expect? For someone to give up a good job (or maybe’s he’s just as sick of that job as well?) to contemplate moving into Financial Services at a time when there is so much uncertainty about the future and our earnings capacity should be cautioned by existing practitioners. This isn’t negativity, this is common sense. The optimist who thinks the sun is going to shine every day gets a rude awakening when it doesn’t. The pessimist who takes an umbrella with him might be accused of being negative but they keep dry when it inevitably rains. The sensible thing to do at this point is to view all this from afar, keep your powder dry and make a decision when you know the reality of the effects of RDR. That’s just being sensible, not negative!

  34. Ross Perot | 10 Dec 2012 4:09 pm

    If they spent less time trawling stories on this site for things to moan about and more effort working productively, maybe their business levels would rise accordingly.

    Or perhaps they’re just not very busy…

    Pot – Kettle, perhaps?

  35. Stephen, my guess is that you will do really well. You should join one of the classy financial planning firms and work initially as a para planner. This will let you use your writing skills and get an idea of how quality advisers work and sell themselves to clients.

    As for the pathetic vitriol uttered by Richard Bishop and co, just be happy that you have much better potential than them now as well as when they were your age.

    For excellent tips on how to make it work, speak with Harry Katz and Dennis Hall – two excellent advisers happy to help.

  36. We have been working on 3% initial, plus trail on all single premium business for over 5 years. So RDR will not hurt cashflow.

    We file check every case internally – I pay a chartered financial planner to do it and even if we had 2 successful claims a year (we have yet to have a successful one) it would cost us £15k (hard but affordable) and we still manage to make a healthy profit from middle market clients in the the middle of a recession.

    Drs, dentists, lawyers and accountants all face unlimited claims for professional negligence and many lawyers now cannot get PI. IFA as a profession are now in the same league I see that as a positive and if you don’t want to carry that risk personally work for someone else and let them carry it – you can then walk away whenever risk free.

    As to paperwork talk to a teacher or a medic ours is not so bad and technology really helps. We get to pick our own holidays, chose when we work and who with – and if we want to earn more money we see more clients – simples.

    Exams were a pain but I learnt stuff I should have known and plan to do more over time.

    The RDR is a crock and Hector Santes a fool – I don’t know what that makes Barclays. Bur our role of looking after clients will always continue – simply because people need our help.

    When life hands you lemons make lemonade.

  37. “Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty… I have never in my life envied a human being who led an easy life. I have envied a great many people who led diffcult lives and led them well.”
    — Theodore Roosevelt

    Good on you Stephen. RDR is ill-contrived and poorly executed, our regulator doesn’t understand what we do or how we do it, and many individuals who *really* need advice will be denied it – but for those who have the guts and determination to remain in this sector of the industry and ‘fight the fight’ you will have a challenging but, ultimately, deeply rewarding new career before you.

    GWJ

  38. He is absolutely mental although the publicity should mean he gets a few clients. Will love to see their faces when he discloses the fees as lets face it, we could probably all undercut him.

  39. Problem is, clients need a solicitor or accountant and so will pay the fees. However as far as financial advice goes, most of them are better off if they just leave money in a good bank account or buy life cover from tesco with a £50 tesco voucher.

    we are not needed in the numbers we are at present.

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