There’s been some bluster lately about the value, or otherwise, of being an Independent adviser, some quite pejorative. Now it’s time for the fight back!!
I recently scanned the websites of the MatrixData Top 100 Financial Adviser firms. It is often publicised as the Top 100 IFA firms. It isn’t. Not with Openwork in 2nd and St James Place at 4th. I was stunned to note the column inches that firms devote to calling themselves Independent Financial Advisers and explaining why it’s important to their clients, when we are supposed to believe that neither advisers nor clients care one iota about it.
Independence is the only way you, the client, can get a truly objective view of your finances. Being independent demonstrates that the firm “fully understands their clients’ needs”. It’s “altogether individual”. We create strategies tailored to client needs, using every possibility available. Independent in thought, in action, and independent of any product provider. Because “all our advisers are independent … their advice is truly impartial.” One size doesn’t fit all. Clients are individuals. The firm’s only allegiance is to the client, not to any product provider. IFAs only ever work in the client’s best interest. Et cetera.
So here’s the rub. When revising their websites over Christmas, how will they change their explanations about their impartiality, demonstrate their commitment to clients, prove their independence of thought and action?
If you decide to be Restricted advisers, like Openwork or St James Place, you must put in disclosure documents that you offer Restricted advice. You must say what those Restrictions are, whether by way of products or product providers. You must also give an oral disclosure, telling your clients you offer Restricted advice and stating the nature of the Restriction.
Not a conversation I would look forward to, I must say.
Because it means that you decided, sometime in 2012, that your clients, some of whom you haven’t met yet, some of whom will face dramatic changes in their life and finances, will never need advice on certain products or arrangements from certain providers.
Does Adviser Charging mean we are all now agents of the client, not agents of the product provider? No.
Adviser charging merely removes the potential for commission bias. If you are Restricted and selling the products of one firm, or a limited range of products and providers dictated by your network, or even a mythical “nearly Independent adviser”, you are not the agent of the client. Quite simply, the client did not set the advice agenda. You did.
It’s simple to explain how Restricted advice is in the firm’s best interest (easier, cheaper, quicker, more profitable) and how clients probably won’t care anyway (which is such a flawed assertion I can’t begin to refute it – actually I can, but I’m out of words).
How can it be in a client’s best interest for advisers to have decided what solutions they will need, months or years before they walk through the door?
How can it be in the client’s best interest to provide less tailored, less bespoke, less individual, less impartial, less objective, not Independent, Restricted advice?
It can’t. This isn’t about a “willingness to die on the altar of Independence”. It’s about a commitment to put client best interests first, by delivering Independent advice.