Not everyone who needs advice can afford it, regardless of how fees are collected. Some of the people most in need of advice perceive it to be out of their reach. Financial planning should not just be the domain of the high-net-worth individuals of today, it should also be for the high-net-worth individuals of tomorrow.
In the years since the economic downturn, banks and national financial institutions have reduced their financial services propositions to almost nothing.
Learning the ropes
The bancassurance model, where banks and insurance companies formed partnerships to sell products, was flawed, but did provide a fertile training ground for the IFA and wider adviser community. I belonged to that group.
If there is no bancassurance, little recruitment to large national advice firms and the continual contraction of the market for exit or increased profitability, where is the next generation coming from and where does the average person turn to for their advice?
My firm McKnight Financial has decided to create a proposition hoping to provide a source of good quality advice and a cost-effective solution. This is to try to attract people who have the desire to be self-sufficient in later life and provide for their families, and who want a less convoluted investment management solution that is cost and tax efficient.
These people are essentially all of us. Not everyone needs the enterprise investment scheme and venture capital trust advice, or needs to understand the vagaries of Sipp and SSAS planning. Most people just want to know they can trust their adviser and are getting value for money.
But what is value for money for a formal advice plan and solution delivery, a daily electronic fund feed, secure email communications, editable personal information, direct access to the adviser support team, regular newsletters and annual reports along with annual reviews?
That is up to the adviser and their business, as long as clients are kept informed. With good staff and the systems that we all have access to, these types of restricted solutions services should be successful.
They are compliant with the Financial Conduct Authority’s guidelines and provide a good level of service. This is outlined and agreed at the outset with the client so they know exactly what they should expect and, depending on the price point, they should offer excellent value for money too.
Spoilt for choice
There is a place for all types of proposition in our marketplace, and our initial and main business continues to thrive on the full fat business we have always looked to develop.
Referrals continue, advice continues to be delivered successfully and fees continue to be collected. Nothing changes.
These clients need the services marketed or recommended. Our new business aims to work to the side of the main business, never crossing streams. Both offer great advice and satisfy the clients they attract. Both sets of clients know exactly what they are paying for and value these services.
Graham McKnight is managing director of McKnight Financial.