Wings spread or clipped?
The principal purpose of the Financial Advice Market Review carried out by the FCA and sponsored by Harriet Baldwin (Chief Economic Secretary to the Treasury) is to broaden the availability of advice to ordinary people.
Critical to the purchasing of advice is the “price of advice”. Just about the best financial journalist interested in the FAMR is Holly Mackay who runs a splendid website “boring money” which like Pension PlayPen is “a lot more serious than it sounds” Tm Paul Lewis.
Surprise surprise , people are looking for value for money from financial advice and if the money is too big, the question of value isn’t considered.
Most IFAs charge £100+ an hour, I charge £350 and hour (excellent value) but we aren’t being bought by Joe Bloggs for very good reason.
Joe Bloggs has an idea of what he’s prepared to pay for financial advice and it begins and ends with zero. It is an uphill struggle to get Joe (or Joan) to pay for what they can get for free from Boring Money, Money Saving Expert and a whole load of other financial websites.
Boring Money keep on pushing little financial nuggets our on twitter and I keep on capturing them using my snipper. They are getting real information from real people like Joe and Joan.
It would seem there are plenty of Joe/Joans who don’t feel too comfortable on their own- but that’s where they are
They are also researching richer people and finding some alarming responses
My firm, Pension PlayPen , which provides advice to employers choosing a workplace pension for their staff, has just cut its price from £499 to £199. Some introducers can get further discounts on request (henry.tapper@pensionplaypen.com).
When we wrote to about 3000 agents who’ve signed up for the service saying we were cutting our prices, we got lots of people (who were already getting discounts) moaning that we were eroding their value. I tried to point out that the value I’d given them I was now giving to others but it didn’t wash. The fact is that people want something for nothing and usually get it.
I’m not planning to give away Pension PlayPen anytime soon, but our aspiration is to make our service so efficient that we can more or less give it away.
That’s because we are aligned with Joe and Joan, who think the right price for financial advice begins and ends with a zero.
Of course, if you get a few zeros against the number of people who use your advice, then you can just about do things for nothing – which is what the FAMR should have grasped by now.
There always will be people prepared to pay £0 for financial planning & advice. It is their problem not mine.
It is also true that some people will benefit more than others from getting comprehensive financial planning.
In fairness the HNW and UHNW will benefit the most and good financial planning does not cost them anything. Once we sort out the layers after layers of charges they pay to investment managers and fund managers and arrange a low cost investment proposition, our cost will become negative for them – they get us for FREE.
But this is one little thing we do for clients, we also take the guess work and crystal ball away. So they stop buying high (funds which did well last year) and sell low – which is the definition for wealth destruction.
We also do many other things, like trying to help them make sense of their life and use their money to achieve what they really want.
Value for money always involves getting more out than you put in. I agree that you can extract a lot of value for the High Net Worth- but how much value can you add to Joe and Joan? Is it worth the price?