The day has arrived when I reveal my true opinion of the IFA market, and having worked in this arena now for the best part of nine years there's certainly been a lot of change.
But perhaps what hasn’t altered in that time is the struggle IFAs seem to have in improving their image, sadly because for the majority of knowledgeable and genuinely caring IFAs trying to help clients there is still a part of the market with a horribly negative attitude and which appears to undo all of the good work everyone else attempts.
What I take away with me when I leave IFAonline tomorrow is the absolute belief the IFA sector is doing an excellent job in trying to help clients plan for their financial futures, and without it the consumer will suffer a detriment. I’ve met a huge number of good quality IFAs over the years – many of whom have become friends too. And new thinking has emerged over the last three years in particular which indicates firms and individuals are keen to share their ideas with everyone else in the market.
What it suggests is advisers realise the best way to improve the image for everyone’s benefit is to work together, whether you call yourself an IFA, a financial adviser, a financial or life planner.
And I do think professional standards have leapt over the years too (albeit the jostling for position between industry bodies hasn't exactly helped).
That said, I fear the image of the IFA has not, and that has to be addressed quickly otherwise the government will continue to believe the wider consumer market does not need any other than generic financial advice.
Of course they need IFAs to give advice, as study after study shows consumers don’t really want to take control and responsibility of their finances, they seem to want someone else to do it for them. The trouble is a large percentage of the industry gives the impression they are only interested in the high-net-worth market and then wonders why the government sees IFAs in a poor light.
This is perhaps where the IFA market is going wrong. The IFA today isn’t too good at self-promotion and making it absolutely clear the service they offer and why they do it. If there are advisers in the market, for example, who do want to show what they can for the wider mass market – even though much of the market seems to argue ‘we’re not interested in advising the mass market’ – you really ought to make more noise about the quality of the service being offered.
There are still some in the market, for example, who believe the selling point of their service is to argue they know which funds to pick so clients can outperform the market. The IFA’s true expertise is in managing client expectations about their long-term financial needs, yet some intermediaries still claim their knowledge means they can beat the market.
I have to be honest on this one when I say I’ve never been totally convinced IFAs can truly know of the thousands of funds on the market which ones are going to consistently return more than any other fund on the market. As a small firm, it just can’t be possible to constantly research thousands of funds and predict which funds will outdo the others while arguing consumers should invest for the long-term. I’m sure advisers will argue it is possible, but I’ve been intrigued by the shift to passive funds by many planners who believe you can’t outperform the market so why pretend otherwise.
Similarly, there is a ridiculous argument by some in the market who are convinced the Financial Services Authority is out to get them, out to shut down IFA firms, and is doing everything it can to move advice to bancassurance.
To put it bluntly, get a grip. Sure, it would be convenient to the FSA but the advisers who do constructively and willingly show the FSA what it does and why it does it have found the FSA wants to see an independent advice continue as long as firms are acting in the interests of consumers.
But it doesn’t take a rocket scientist to know if what you encounter is constant negativity and criticism the FSA is going to assume you’re not the type of companies the consumer will want to do business with because you’re sending out negative signals about moves which are at least designed to help consumers.
Again, it comes down to the image the adviser puts out and how they want to be perceived. I have to say I wouldn’t put my business with some of the negative-thinking IFAs I have encountered over the years, but thankfully the number of such voices is decreasing.
I think perhaps the most constructive thing financial advisers can do now is start to look at transparency of service – just as the industry is now beginning to do so – and consider whether it is easy for consumers to see exactly what you do. The ‘fees versus commission’ debate is a red herring. It makes no difference either way how you are remunerated as long as the client knows exactly what service they are paying for, how they can pay for it, and what exactly that cost will be.
I don’t believe IFAs are entitled to trail commission on advice if they’re not offering a service for the money earned. I’m perfectly capable of getting in touch with a provider or investment firm if necessary to find out what assets I have accumulated so why should I pay an adviser if that’s all they do once a year? That’s not service. That’s a data collection which could be done online through a fund supermarket and I personally, as a consumer, want more than that.
I think the younger market is one many IFAs are missing out on because I have great respect and time for IFAs given the knowledge I’ve acquired but as a consumer outside the market I really can’t say confidently I know what IFAs do and why I should employ the service of one. And yet if you help people at a younger age, they will understand the need for regular financial advice once they really begin to acquire assets.
I’ve really enjoyed my time at IFAonline so thank you to everyone who has contributed their thoughts, comments, criticisms and heated battles over the years. I have truly loved writing for the IFA market and I’m really going to miss it. But it’s time for fresh thinking to keep IFAonline at the forefront of online news delivery, and I know the incoming editor, Katrina Baugh (currently deputy editor at IFAonline's sister publication Professional Adviser) and the rest of the team will do a great job at making sure you continue to the information you need to help run your businesses.
Best of luck to all and thanks again for helping to make IFAonline the success it has become. You never know, I may be back in later years and this may not be the last you hear of me.
Julie Henderson is the outgoing editor of IFAonline.
The views expressed are those of the author and not those of the company she represents.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Julie Henderson on 020 7034 2679 or email [email protected].IFAonline
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