By Carl Roberts
You know the the typical financial advice service model: a client comes for advice, the adviser drafts a plan, they plan investments and review pensions, consolidate, and charges a percentage based ongoing fee, with the client occasionally coming in for reviews.
This service model has worked fine for the generation that didn't need the financial planning process until they were retired on close to it. However, I think there will be less demand for the traditional service model and more demand for something that is far more tailored and flexible.
We already know that when it comes to affordability, there is an advice gap. But what about another type of advice gap, where people want the advice, can afford it, but don't like the typical payment structure?
The other day I met with a new prospective client. He has spent years building a very successful IT company. He has made various investments along the way and as any business owner would know has dealt with investment risk at a very real level.
He wanted a plan for how much he needs to save to be able to retire and live the lifestyle he desired. As part of the plan he wanted to understand the pension annual allowance rules and what sort of investment asset allocation is right for his him.
He didn't need me to ‘manage' his investments. He had an online investment account, was comfortable using it and wanted to be in control of this going forward. Therefore, the traditional "management" role wasn't going to cut it.
Technology is one of the problems we face in this situation. We are able to offer our clients some pretty decent advised platforms for investing their money. But that's just it. They are ‘advised' platforms. If the client wants to make their own ad hoc contributions, set up a new Junior ISA for their child or switch their investments they have to go via us. We then need to produce a suitability report. It's not quick and easy.
The client can do all this themselves straight away on a direct to consumer platform but then we do not have access to it.
There doesn't appear to be a halfway point: technology that allows both adviser and client access and both to be able to make changes with clear records of who did what.
Another example is a young couple I met recently, both high earning directors. While they have little in the way of assets, they are now in a position to seriously build their savings. They have an online investment account and are comfortable using this. They want a plan and guidance around how they should be structuring their investments going forward. In other words, I'll need to be more than a button presser.
I think it's time we treated clients with respect and trusted them that they can make their own decisions where they feel comfortable. When Pension Freedoms was implemented we didn't see a millions of people blowing their pensions.
When it comes to financial advice I think more and more people will want a plan and access to our expertise and trusted guidance. They won't want us to act as gatekeepers to their money.
This will become even more true with the next generation who have grown up only ever dealing with an app and having access to everything in seconds.
So, what's the solution? I'm not talking robo or online advice here. I'm talking human financial advice done a slightly different way.
At RTS Financial Planning, we are creating two different service offerings. The first is a traditional fully managed service where we use an advised platform. However, we're also making a coaching service available, where we provide guidance and then the client ultimately implements actions themselves using their own platform of choice.
It's important we listen to the client and actually find out the type of service they are looking for. The FCA rules state this anyway: you shouldn't be shoe-horning them into one type of service.
Our coaching service can be much more bespoke. The client chooses how much time they require of us each year and we work out our cost and charge a monthly retainer. For many clients, it's much more cost effective and as planners we are only paid for our time.
Make the service about the person, not the money.
Carl Roberts is a Managing Director and Chartered Financial Planner at RTS Financial Planning. Read his full profile here.
