Ongoing Financial Advice...what's reasonable and fair?
Discussion
janesmith1950 said:
...though what you get for that over guidance is personalised advice specifically for you that is insured and you have ombudsman and civil action protection against faulty advice into perpetuity, to the best of my knowledge.
Mmmm. Unless you are a dodgy IFA who is choosing investments for his/her gain rather than in the best interests of the client, how or why would you need to insure against advice? I think you are scaremongering.I'd be interested in situations where a client has received compensation through the fees they pay the IFA.
I'm sure my terminology is off but I don't mean where a compensation scheme has stepped in, I mean specifically through the fees they've paid their IFA to cover that kind of scenario.
I'm sure my terminology is off but I don't mean where a compensation scheme has stepped in, I mean specifically through the fees they've paid their IFA to cover that kind of scenario.
Phooey said:
janesmith1950 said:
...though what you get for that over guidance is personalised advice specifically for you that is insured and you have ombudsman and civil action protection against faulty advice into perpetuity, to the best of my knowledge.
Mmmm. Unless you are a dodgy IFA who is choosing investments for his/her gain rather than in the best interests of the client, how or why would you need to insure against advice? I think you are scaremongering.b
hstewie said:
hstewie said: I'd be interested in situations where a client has received compensation through the fees they pay the IFA.
I'm sure my terminology is off but I don't mean where a compensation scheme has stepped in, I mean specifically through the fees they've paid their IFA to cover that kind of scenario.
I have huge doubts about any likelihood of something being claimed by this. Happy to hear otherwise....I'm sure my terminology is off but I don't mean where a compensation scheme has stepped in, I mean specifically through the fees they've paid their IFA to cover that kind of scenario.
I suspect the vast majority of IFA-led risk assessments will find most people are a little worried about losing all their money, and hence become fairly risk-averse......& consequently are perhaps led into fairly safe things they could perhaps have easily found for themselves, if they took the time!
PII is compulsory for Advice. It oaysoutll of the time. It's so risky for the insurer, that there are very few underwriters in the marketplace and the premiums are incredibly high (predominently due to the sums involved being very high and there being no time backstop to claims being placed, meaning the risk runs on into perpetuity).
If you have had bad Advice, your advisor's insurance would cover it, meaning you're not reliant on the advisor having sufficient liquidity to pay your claim. If your advisor is no longer in business, you can claim from the FSCS (which all advisors contribute to).
If you take guidance rather than financial Advice, you are not covered by these.
People do and have needed to aim from advisors for poor advice. Like any profession, there are good and bad advisors.
The chances of an advisor advising badly are likely considerably less than an untrained punter making financial decisions based on generic guidance.
The benefit of guidance is cheapness, the downside is less protection than having taken Advice. You pays your money, you take your choice.
I no longer have skin in the game, but I've worked with hundreds of advice firms as a supplier and been a CF1 of a regulated advice firm.
If you have had bad Advice, your advisor's insurance would cover it, meaning you're not reliant on the advisor having sufficient liquidity to pay your claim. If your advisor is no longer in business, you can claim from the FSCS (which all advisors contribute to).
If you take guidance rather than financial Advice, you are not covered by these.
People do and have needed to aim from advisors for poor advice. Like any profession, there are good and bad advisors.
The chances of an advisor advising badly are likely considerably less than an untrained punter making financial decisions based on generic guidance.
The benefit of guidance is cheapness, the downside is less protection than having taken Advice. You pays your money, you take your choice.
I no longer have skin in the game, but I've worked with hundreds of advice firms as a supplier and been a CF1 of a regulated advice firm.
janesmith1950 said:
PII is compulsory for Advice. It oaysoutll of the time. It's so risky for the insurer, that there are very few underwriters in the marketplace and the premiums are incredibly high (predominently due to the sums involved being very high and there being no time backstop to claims being placed, meaning the risk runs on into perpetuity).
If you have had bad Advice, your advisor's insurance would cover it, meaning you're not reliant on the advisor having sufficient liquidity to pay your claim. If your advisor is no longer in business, you can claim from the FSCS (which all advisors contribute to).
If you take guidance rather than financial Advice, you are not covered by these.
People do and have needed to aim from advisors for poor advice. Like any profession, there are good and bad advisors.
The chances of an advisor advising badly are likely considerably less than an untrained punter making financial decisions based on generic guidance.
The benefit of guidance is cheapness, the downside is less protection than having taken Advice. You pays your money, you take your choice.
I no longer have skin in the game, but I've worked with hundreds of advice firms as a supplier and been a CF1 of a regulated advice firm.
So I am genuinely curious about how many people (perhaps what % of those who have taken IFA advice) successfully claim. If you have had bad Advice, your advisor's insurance would cover it, meaning you're not reliant on the advisor having sufficient liquidity to pay your claim. If your advisor is no longer in business, you can claim from the FSCS (which all advisors contribute to).
If you take guidance rather than financial Advice, you are not covered by these.
People do and have needed to aim from advisors for poor advice. Like any profession, there are good and bad advisors.
The chances of an advisor advising badly are likely considerably less than an untrained punter making financial decisions based on generic guidance.
The benefit of guidance is cheapness, the downside is less protection than having taken Advice. You pays your money, you take your choice.
I no longer have skin in the game, but I've worked with hundreds of advice firms as a supplier and been a CF1 of a regulated advice firm.
I think you meant to say it “pays out all the time”: what are the numbers, and what (broadly) are the reasons?
What follows is, I appreciate, just my views, & will not apply to everyone.
We are coming out of the PPI scandal now, but I’ve seen one example risk assessment form, & it didn’t make me feel it was seriously narrowing things down other than “I’d prefer not to lose too much please”!
Hence why I feel (personally) that I do not believe an IFA can get inside my head any better than an experienced “planner” looking at my numbers, broad aims and giving me some pointers in the right direction. Along with the option to access a decent (but limited & simple) set of fund types at low overall cost.
Which falls nicely into my (personal!) belief in the Lars Kroijer approach to investing.
I do suspect I have more “interest” in finance topics than the average person - as I suspect most people who post here or on some MSE boards actually do.
For those individuals, there is a wealth (pun intended!) of access to financial information that simply was shrouded in mystery even 10-20 years ago, & the financial profession has broadly done a poor job of simplifying it.
To those who have taken advice & profess to being happy with the performance....I’d say “what is your definition of good?”. I have one friend who tells me he is happy to get a reasonably safe 5%. To me, that sounds pretty average, given it actually probably is not that safe!
mikeiow said:
...there is a wealth (pun intended!) of access to financial information that simply was shrouded in mystery even 10-20 years ago, & the financial profession has broadly done a poor job of simplifying it.
This (now) a key point. 99% of people don't actually need (paid) advice, they just need to sit down in front of a computer and do a little research. Having someone on hand to call in the middle of the day to ask a few questions to is all they will ever need. Everything else is on the internet. So if you don't need to pay for (ongoing) advice, why would you need to pay for your ongoing advisors insurance? It's like buying pet insurance for a stuffed toy.janesmith1950 said:
No judgement being made here at all, but to clarify, does this mean IM offers guidance, but cannot make a recommendation as to what the client should do? I presume, may be wrong, that this then means the client has not got the security of insured Advice and so if, in a few year's time, they realise they misunderstood or did not appreciate the risks in the guidance offered, and have lost out as a result, they have little or no comeback, whereas if they took insured advice, they likely would.
There is plenty of room for guidance, and probably not enough of it around, however consumers should be aware of the limitations of guidance versus the costs and security of personal Advice.
Yes, advisors cost money and some take the Mickey in ongoing charges (though they are very much on the regulator's radar), though what you get for that over guidance is personalised advice specifically for you that is insured and you have ombudsman and civil action protection against faulty advice into perpetuity, to the best of my knowledge.
There is plenty of room for guidance, and probably not enough of it around, however consumers should be aware of the limitations of guidance versus the costs and security of personal Advice.
Yes, advisors cost money and some take the Mickey in ongoing charges (though they are very much on the regulator's radar), though what you get for that over guidance is personalised advice specifically for you that is insured and you have ombudsman and civil action protection against faulty advice into perpetuity, to the best of my knowledge.
janesmith1950 said:
PII is compulsory for Advice. It oaysoutll of the time. It's so risky for the insurer, that there are very few underwriters in the marketplace and the premiums are incredibly high (predominently due to the sums involved being very high and there being no time backstop to claims being placed, meaning the risk runs on into perpetuity).
If you have had bad Advice, your advisor's insurance would cover it, meaning you're not reliant on the advisor having sufficient liquidity to pay your claim. If your advisor is no longer in business, you can claim from the FSCS (which all advisors contribute to).
If you take guidance rather than financial Advice, you are not covered by these.
People do and have needed to aim from advisors for poor advice. Like any profession, there are good and bad advisors.
The chances of an advisor advising badly are likely considerably less than an untrained punter making financial decisions based on generic guidance.
The benefit of guidance is cheapness, the downside is less protection than having taken Advice. You pays your money, you take your choice.
I no longer have skin in the game, but I've worked with hundreds of advice firms as a supplier and been a CF1 of a regulated advice firm.
I am not convinced that you are making no judgement here! If you have had bad Advice, your advisor's insurance would cover it, meaning you're not reliant on the advisor having sufficient liquidity to pay your claim. If your advisor is no longer in business, you can claim from the FSCS (which all advisors contribute to).
If you take guidance rather than financial Advice, you are not covered by these.
People do and have needed to aim from advisors for poor advice. Like any profession, there are good and bad advisors.
The chances of an advisor advising badly are likely considerably less than an untrained punter making financial decisions based on generic guidance.
The benefit of guidance is cheapness, the downside is less protection than having taken Advice. You pays your money, you take your choice.
I no longer have skin in the game, but I've worked with hundreds of advice firms as a supplier and been a CF1 of a regulated advice firm.
You know fully well that financial planning involves giving all manner of advice, from increasing pension contributions to paying down mortgages early and the whole spectrum of tax planning and also life coaching to ensure clients do not panic sell during the inevitable market downturns.
We do all of this (or whatever of this is required) on an individual basis for each client.
The only thing we don't do is try and sell anyone a particular product. This is, at the end of the day, the only part of the process that is Regulated Financial Advice.
We know, from experience, that anyone who is sensible enough to to want to engage in this (or who have already started to set money aside for the future) has the intelligence to select their own investments when given professional guidance.
Many (but certainly not all) IFA's seem to believe otherwise and do not credit people with the intelligence they deserve and whilst appearing to be knowledgeable, in reality they overcomplicate matters with industry jargon and do not provide the clarity that we do (which is not a surprise when you consider that they have a vested interest in their clients needing to rely upon them in order for them to earn their eye-watering fees).
You are also being misleading when you say PII is compulsory for financial advice without balancing this statement by also highlighting it is also compulsory for providers (such as IM) too.
The reason that PII is massively more expensive for advisers (than for providers) also has nothing to do with the sums involved being high (providers typically have to insure vast multiples of the sums advisers have to insure), it is due to the high risk that the advice given was wrong/bad.
For example, the FCA recently completed a review of pension transfers and found that (IIRC) in 60% of all the transfers reviewed the advice was wrong/bad.
So I take my hat off to you for trying to position it that it is better to pay a massive premium for potentially bad financial advice, rather than not take such advice in the first place!
You are also being more than misleading when you claim that if you take financial advice your are covered by the FSCS, but if you take financial planning (from IM) you are not covered by the this.
That is completely untrue.
I think the problem here is that IM has let the genie out of the bottle by letting people know that what they though was financial advice is in fact financial planning - and we are so confident in our investment management and client service levels that we offer this financial planning for free.
If you still need assistance with fund selection then yes, you should see an adviser, but you will be doing so considerably better informed than you would have been before speaking to IM.
Alternatively, we are always happy to add a regulated fund recommendation to our process for 3% initial and 1% a year extra for those that want the additional "protection" you describe!
Phooey said:
This (now) a key point. 99% of people don't actually need (paid) advice, they just need to sit down in front of a computer and do a little research. Having someone on hand to call in the middle of the day to ask a few questions to is all they will ever need. Everything else is on the internet. So if you don't need to pay for (ongoing) advice, why would you need to pay for your ongoing advisors insurance? It's like buying pet insurance for a stuffed toy.
I would say that's reasonably fair.One thing I've heard advisors offer is "confidence".
Personally I think the one thing I wish there as a little easier access to was simple/quick/basic info on the best combination of wrappers and things like how much cash to keep on the sidelines as that's arguably where I struggle more than which products to put my money in.
bhstewie said:
hstewie said:Phooey said:
This (now) a key point. 99% of people don't actually need (paid) advice, they just need to sit down in front of a computer and do a little research. Having someone on hand to call in the middle of the day to ask a few questions to is all they will ever need. Everything else is on the internet. So if you don't need to pay for (ongoing) advice, why would you need to pay for your ongoing advisors insurance? It's like buying pet insurance for a stuffed toy.
I would say that's reasonably fair.One thing I've heard advisors offer is "confidence".
Personally I think the one thing I wish there as a little easier access to was simple/quick/basic info on the best combination of wrappers and things like how much cash to keep on the sidelines as that's arguably where I struggle more than which products to put my money in.
I'm glad you mentioned it though as it is an example of one of the fundamental cornerstones of good financial planning (rather than financial advice)!
JulianPH said:
Alternatively, we are always happy to add a regulated fund recommendation to our process for 3% initial and 1% a year extra for those that want the additional "protection" you describe!
Genuine question as I've no skin in the game v some of the "cats in a sack" stuff that seems to go on between those of you that do Let's say I give you the 3% initial and 1% a year extra.
In what circumstances could I claim against you for having mis-advised me?
Woodford leaps to mind, would that be provable as bad advice or "the value of investments may go up and down and you may not get back what you put in"?
I was just reading on another forum about someone who was with an IFA and they were "sold" to another company and that other company now wants to move them into a new/different product they recommend and wants 2% for doing so.
JulianPH said:
I am not convinced that you are making no judgement here!
You know fully well that financial planning involves giving all manner of advice, from increasing pension contributions to paying down mortgages early and the whole spectrum of tax planning and also life coaching to ensure clients do not panic sell during the inevitable market downturns.
We do all of this (or whatever of this is required) on an individual basis for each client.
The only thing we don't do is try and sell anyone a particular product. This is, at the end of the day, the only part of the process that is Regulated Financial Advice.
We know, from experience, that anyone who is sensible enough to to want to engage in this (or who have already started to set money aside for the future) has the intelligence to select their own investments when given professional guidance.
Many (but certainly not all) IFA's seem to believe otherwise and do not credit people with the intelligence they deserve and whilst appearing to be knowledgeable, in reality they overcomplicate matters with industry jargon and do not provide the clarity that we do (which is not a surprise when you consider that they have a vested interest in their clients needing to rely upon them in order for them to earn their eye-watering fees).
You are also being misleading when you say PII is compulsory for financial advice without balancing this statement by also highlighting it is also compulsory for providers (such as IM) too.
The reason that PII is massively more expensive for advisers (than for providers) also has nothing to do with the sums involved being high (providers typically have to insure vast multiples of the sums advisers have to insure), it is due to the high risk that the advice given was wrong/bad.
For example, the FCA recently completed a review of pension transfers and found that (IIRC) in 60% of all the transfers reviewed the advice was wrong/bad.
So I take my hat off to you for trying to position it that it is better to pay a massive premium for potentially bad financial advice, rather than not take such advice in the first place!
You are also being more than misleading when you claim that if you take financial advice your are covered by the FSCS, but if you take financial planning (from IM) you are not covered by the this.
That is completely untrue.
I think the problem here is that IM has let the genie out of the bottle by letting people know that what they though was financial advice is in fact financial planning - and we are so confident in our investment management and client service levels that we offer this financial planning for free.
If you still need assistance with fund selection then yes, you should see an adviser, but you will be doing so considerably better informed than you would have been before speaking to IM.
Alternatively, we are always happy to add a regulated fund recommendation to our process for 3% initial and 1% a year extra for those that want the additional "protection" you describe!
Absolutely no judgement on my part. You know fully well that financial planning involves giving all manner of advice, from increasing pension contributions to paying down mortgages early and the whole spectrum of tax planning and also life coaching to ensure clients do not panic sell during the inevitable market downturns.
We do all of this (or whatever of this is required) on an individual basis for each client.
The only thing we don't do is try and sell anyone a particular product. This is, at the end of the day, the only part of the process that is Regulated Financial Advice.
We know, from experience, that anyone who is sensible enough to to want to engage in this (or who have already started to set money aside for the future) has the intelligence to select their own investments when given professional guidance.
Many (but certainly not all) IFA's seem to believe otherwise and do not credit people with the intelligence they deserve and whilst appearing to be knowledgeable, in reality they overcomplicate matters with industry jargon and do not provide the clarity that we do (which is not a surprise when you consider that they have a vested interest in their clients needing to rely upon them in order for them to earn their eye-watering fees).
You are also being misleading when you say PII is compulsory for financial advice without balancing this statement by also highlighting it is also compulsory for providers (such as IM) too.
The reason that PII is massively more expensive for advisers (than for providers) also has nothing to do with the sums involved being high (providers typically have to insure vast multiples of the sums advisers have to insure), it is due to the high risk that the advice given was wrong/bad.
For example, the FCA recently completed a review of pension transfers and found that (IIRC) in 60% of all the transfers reviewed the advice was wrong/bad.
So I take my hat off to you for trying to position it that it is better to pay a massive premium for potentially bad financial advice, rather than not take such advice in the first place!
You are also being more than misleading when you claim that if you take financial advice your are covered by the FSCS, but if you take financial planning (from IM) you are not covered by the this.
That is completely untrue.
I think the problem here is that IM has let the genie out of the bottle by letting people know that what they though was financial advice is in fact financial planning - and we are so confident in our investment management and client service levels that we offer this financial planning for free.
If you still need assistance with fund selection then yes, you should see an adviser, but you will be doing so considerably better informed than you would have been before speaking to IM.
Alternatively, we are always happy to add a regulated fund recommendation to our process for 3% initial and 1% a year extra for those that want the additional "protection" you describe!
There is absolutely a place for guidance and for many people guidance is all they need.
My corner in the conversation is actually on behalf of the consumer.
For the past 3 years I ran a business that placed about 4000 consumers a month with financial advice firms. Those consumers had searched Google for a financial advisor.
What most of them have in common, is that they don't even understand what a financial advisor is really there for, let alone the correct terminology. The majority of them are seeking advice due to a life event, be it time to review or take a pension, or to secure a mortgage. They don't typically have or have had a financial advisor.
Many of these people are pushed into the advice world by pension freedoms, as they no longer seek an annuity, but don't know anything at all about drawdown.
One argument could be that for those consumers, advice is a sledgehammer to crack a nut. Another could be that they are so unknowledgeable about the options that guidance is insufficient.
A point of order or two from your post above. When you say 60% of pension transfer advice was considered unsuitable when reviewed by the FCA, you are referring only to Defined Benefit transfers, rather than pension transfers per se. This is a very small subset of the pension market, with a limited number of advisors able or willing to undertake this work and a very contentious set of rules around it.
PII insurance is expensive for advisors not because their advice is so often wrong, quite the opposite in % terms, but actually because there is no time backstop to liability. In almost all commercial life there is a 6 year limitation on litigation for products/services supplied. For financial advice, there is no time limitation. This means an insurer is covering the risk for the entire advising life of an advice firm, which can be decades. When you consider the high sums involved, the ever changing regulatory landscape and the unlimited time liability, you can see why insurers see Advice as high risk.
Lastly, it seems a bit glib to suggest I support consumers paying a 'massive premium' for advice, for you then to advertise your own Advice service, which is itself priced at the top end of the market (3% up front and 1% ongoing is very top of the market in terms of price).
My position is that the regulator needs to allow advisors and providers such as you to provide something between Advice and Guidance that better informs and protects the consumer, without the advisor being subject to the cost or risk of full Advice.
bhstewie said:
hstewie said:JulianPH said:
Alternatively, we are always happy to add a regulated fund recommendation to our process for 3% initial and 1% a year extra for those that want the additional "protection" you describe!
Genuine question as I've no skin in the game v some of the "cats in a sack" stuff that seems to go on between those of you that do Let's say I give you the 3% initial and 1% a year extra.
In what circumstances could I claim against you for having mis-advised me?
Woodford leaps to mind, would that be provable as bad advice or "the value of investments may go up and down and you may not get back what you put in"?
I was just reading on another forum about someone who was with an IFA and they were "sold" to another company and that other company now wants to move them into a new/different product they recommend and wants 2% for doing so.
So if I recommend investments that are either too high risk or indeed to low risk given the information I collected from you you could have a claim (which, indecently is why many financial advisers will often steer you towards a balanced fund/portfolio!).
If I recommend you move away from something that was more suitable for you than what I recommended you could have a claim,..
If I failed to include in my recommendation something that could be more suitable for you then you could have a claim.
If I failed to gather enough information to make a fully informed recommendation then this could give rise to a claim.
Finally, if I recommend you invest in a steaming pile off s
tty mini-bonds you are very likely to have a claim, but probably not at me as I will have put the advice company into administration and walked into the sunset. You will most likely be left with a maximum £85k FSCS compensation claim, even if you lost £1m.However, if my report gives specific reasons why I did any of the above and you sign to accept this, then you may fail in making a claim in all but the most serious of incidents.
So, the bottom line is that if I collect the right information, recommend an investment in line with your risk/reward parameter and don't cause you an unnecessary tax loss (basically, the absolute basics) then you have no real chance of making a claim against me.
It also does not matter if my recommendation is very expensive, nor if it loses you money.
Basically, if I got my team to put all of the results from their financial planning into a fact find, produced a report (using cheap 3rd party software) recommending one of our IM Optimum Portfolios (this report will auto-generate all the disclaimers and tick all the right boxes) then my financial planning has now become regulated financial advice, but you have virtually zero chance of every being able to claim against me for it.
Obviously I have to check back with you every year to make sure nothing has changed, but that's great because if it has I have the chance to charge you 3% again for a new recommendation!
Regarding Woodford, then if I have been taking 1% a year to monitor the ongoing suitability of your investments and failed to spot that he had completely changed his investment approach and turned the fund into a much higher level of risk, then I believe you should be able to make a claim, but I have not heard of anyone being successful in doing this yet.
So I do question this additional "protection" from regulated financial advice as you have to be a spectacularly stupid financial adviser to put yourself in a position whereby you open to such a claim.
Having said that, people win claims against financial advisers all the time. Make of that what you may.
janesmith1950 said:
bsolutely no judgement on my part.
There is absolutely a place for guidance and for many people guidance is all they need.
My corner in the conversation is actually on behalf of the consumer.
For the past 3 years I ran a business that placed about 4000 consumers a month with financial advice firms. Those consumers had searched Google for a financial advisor.
What most of them have in common, is that they don't even understand what a financial advisor is really there for, let alone the correct terminology. The majority of them are seeking advice due to a life event, be it time to review or take a pension, or to secure a mortgage. They don't typically have or have had a financial advisor.
Many of these people are pushed into the advice world by pension freedoms, as they no longer seek an annuity, but don't know anything at all about drawdown.
One argument could be that for those consumers, advice is a sledgehammer to crack a nut. Another could be that they are so unknowledgeable about the options that guidance is insufficient.
A point of order or two from your post above. When you say 60% of pension transfer advice was considered unsuitable when reviewed by the FCA, you are referring only to Defined Benefit transfers, rather than pension transfers per se. This is a very small subset of the pension market, with a limited number of advisors able or willing to undertake this work and a very contentious set of rules around it.
PII insurance is expensive for advisors not because their advice is so often wrong, quite the opposite in % terms, but actually because there is no time backstop to liability. In almost all commercial life there is a 6 year limitation on litigation for products/services supplied. For financial advice, there is no time limitation. This means an insurer is covering the risk for the entire advising life of an advice firm, which can be decades. When you consider the high sums involved, the ever changing regulatory landscape and the unlimited time liability, you can see why insurers see Advice as high risk.
Lastly, it seems a bit glib to suggest I support consumers paying a 'massive premium' for advice, for you then to advertise your own Advice service, which is itself priced at the top end of the market (3% up front and 1% ongoing is very top of the market in terms of price).
My position is that the regulator needs to allow advisors and providers such as you to provide something between Advice and Guidance that better informs and protects the consumer, without the advisor being subject to the cost or risk of full Advice.
Regarding your point of order, I should point out that "pension transfer" is the definition used to refer solely to the movement of DB schemes. With DC schemes the term is "pension switching". I can see the confusion, but I had thought I was being clear.There is absolutely a place for guidance and for many people guidance is all they need.
My corner in the conversation is actually on behalf of the consumer.
For the past 3 years I ran a business that placed about 4000 consumers a month with financial advice firms. Those consumers had searched Google for a financial advisor.
What most of them have in common, is that they don't even understand what a financial advisor is really there for, let alone the correct terminology. The majority of them are seeking advice due to a life event, be it time to review or take a pension, or to secure a mortgage. They don't typically have or have had a financial advisor.
Many of these people are pushed into the advice world by pension freedoms, as they no longer seek an annuity, but don't know anything at all about drawdown.
One argument could be that for those consumers, advice is a sledgehammer to crack a nut. Another could be that they are so unknowledgeable about the options that guidance is insufficient.
A point of order or two from your post above. When you say 60% of pension transfer advice was considered unsuitable when reviewed by the FCA, you are referring only to Defined Benefit transfers, rather than pension transfers per se. This is a very small subset of the pension market, with a limited number of advisors able or willing to undertake this work and a very contentious set of rules around it.
PII insurance is expensive for advisors not because their advice is so often wrong, quite the opposite in % terms, but actually because there is no time backstop to liability. In almost all commercial life there is a 6 year limitation on litigation for products/services supplied. For financial advice, there is no time limitation. This means an insurer is covering the risk for the entire advising life of an advice firm, which can be decades. When you consider the high sums involved, the ever changing regulatory landscape and the unlimited time liability, you can see why insurers see Advice as high risk.
Lastly, it seems a bit glib to suggest I support consumers paying a 'massive premium' for advice, for you then to advertise your own Advice service, which is itself priced at the top end of the market (3% up front and 1% ongoing is very top of the market in terms of price).
My position is that the regulator needs to allow advisors and providers such as you to provide something between Advice and Guidance that better informs and protects the consumer, without the advisor being subject to the cost or risk of full Advice.
Also, I wasn't offering my own advice service. It was a joke to highlight the absurdity of advice costs (hence the big laughing face next to the comment!).
Despite how our dialogue may come across to others I think we are pretty much in agreement on most things.
My main point is that financial planning is virtually everything you would expect from financial advice (with a lot more thrown in too), just without the product recommendation.
If someone is not able (at the end of the initial process) to decide if they want to pick their own funds or have their money managed for them from a small selection of clearly labelled portfolios then they certainly do need financial advice.
If they are, then they certainly do not need to pay for financial advice.
That is my only distinction, but in order to put this across I have to highlight that what many people consider to be financial advice is actually financial planning, which we offer on a complimentary basis.
Your business sounds very interesting, it would be good to have a chat about it sometime.
I'm sure from this thread and others that we are in broad agreement.
The pension transfer/switch conversation is a great example. You and I know the distinction. Almost everyone outside of the industry wouldn't. Most people reading this thread wouldn't until it was pointed out, despite many of them seeing themselves as canny investers.
The vast majority of consumers don't even understand the difference between independent and restricted.
Happy to have an offline chat about business stuff.
The pension transfer/switch conversation is a great example. You and I know the distinction. Almost everyone outside of the industry wouldn't. Most people reading this thread wouldn't until it was pointed out, despite many of them seeing themselves as canny investers.
The vast majority of consumers don't even understand the difference between independent and restricted.
Happy to have an offline chat about business stuff.
You are right that there are many people who have little idea when it comes to investing. What we are trying to do is let them know that where they believe they need regulated financial advice (something that a great many are priced out of) then there is actually a much lower cost alternative whereby they have a named individual (who is a qualified and experienced IFA) who can give them the help and financial awareness they need without adviser fees (as our Private Client Managers have left the IFA market and are now salaried professionals retained by us for this specific role).
We do find that most of our clients have a very good understanding of finances, either because they already had taken the time to develop this or simply through a greater understanding though their time spent with their Private Client Manager.
I'll send you a PM so we can chat without taking this thread off topic.
We do find that most of our clients have a very good understanding of finances, either because they already had taken the time to develop this or simply through a greater understanding though their time spent with their Private Client Manager.
I'll send you a PM so we can chat without taking this thread off topic.
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