Some years ago, a solicitor asked me to meet with their client who was concerned that he had been given poor financial advice. It turned out that he had been sold three mortgage endowments by three different advisers. I was happy to help and gave him an estimate for our fees. He looked at me shocked and exclaimed ‘I’m not going to pay you! I’ve never paid for advice and I’m certainly not going to start paying now!’.
Unfortunately, by refusing to pay for advice, he had unwittingly put himself in a position where he was relying on, ‘advice’, provided by people who were dependent on selling a product in order to earn a living.
Not a good position to be in, but was this his fault? Probably not. He had never seen the value of financial planning because he had only met ‘advisers’ who got paid from the sale of a product.
From a survey of 100 independent financial advisers, 75% charge a percentage of the amount a client invests for initial advice. (Source: New Model Adviser)
Is this really independent financial advice?
The adviser may not represent an insurance or investment company, and therefore be classed as ‘independent’, but if the adviser only gets paid if the client invests money, are they not ‘Dependent Financial Advisers’? Dependent on selling a product.
Do you really want to get advice from somebody who must sell you something to be paid?
Our view is that a financial planner should charge for the work they do regardless of whether they recommend a product or not. This will give the client the comfort of knowing that they will get impartial advice, confident in the knowledge that the adviser does not need to sell them a product that they may not want or need.
So, what is financial planning if it does not involve the recommendation of a product?
Many of our clients initially come to us thinking they need to buy a product (a pension or investment), but after we have explained what true financial planning is, they understand that what they really want to know is how much is ENOUGH? Enough to give them the lifestyle that they want without the fear of running out of money, whatever happens.
They think this is the big question however the biggest question is, enough for WHAT? What is your lifestyle now and what do you want it to be like in the future? The planner should then work with the client to achieve this lifestyle, using the resources the client has.
This is what financial planning should focus on before we even think about recommending products, which are effectively just tools to get the job of providing you with Enough done.
We believe that this is where the true value of financial planning lies, not in recommending products.
Dependent financial advisers, who focus on products, such as pensions and investments first are dinosaurs and should become extinct.
Professional financial planners, helping their clients identify, achieve and maintain their desired lifestyles, without the fear of running out of money, whatever happens, working independently of the need to sell financial products providers are the future. They provide much better value for money and working with them should be interesting and fun!
If you would like to talk to a truly independent financial planner please get in touch on 01661 860438 or email David at email@example.com
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