Elite Financial Planning

2007: Elite Squad - Jose Padhila

Financial planning and the Retail Distribution Review are under scrutiny again. Today a letter in the Financial Times but Conservative peer Lord Howard Flight is highly critical of the regulator and RDR. He believes that the new rules being introduced by the FSA will mean that most people will no longer receive financial advice, except those with savings over £100,000. This is not a new point of view, indeed the vast majority of advisers cannot afford to provide advice going forward to most of their commission based clients. This is not an issue for our clients, who have always paid us fees for the work that we do. Our clients are admittedly a bright bunch and able to recognise the value of good financial planning and understand that there is no such thing as a free lunch.

Delusion that financial planning costs nothing or very little is a national condition. Frankly I don’t believe that the regulator really appreciates how expensive it is to provide. JP Morgan, who have been doing a fair bit of work on fees for the last couple of years have today published a report suggesting that only 13% of consumers are interested in seeking out ongoing fee-based advice. It wasn’t an enormous survey (2,028) and most will know my lack of regard for surveys, but this was one aimed at higher rate taxpayers. This is concerning as in general I suspect that the regulator was happy that those paying little or no tax could be adequately helped with low cost products that they can source themselves or employer arrangements. This survey suggests that even the more affluent are struggling to understand the value of financial planning advice.

To my mind this suggests that collectively as financial advisers, we have failed to educate people on the benefit of financial planning. Indeed it is evident from the reckless handling of national finances, that most world leaders and politicians also do not understand some of the basic principles. Thankfully I am not tasked with saving the world, but in helping clients that want proper financial planning. Our clients are elite, because they are amongst the small group that “get it”. So as we celebrated our 13th birthday a few days ago, I am please that at least our clients are getting great value for money and understanding the value of money.