Having spent nearly 24 hours somewhere in a field hotel in Hampshire, I am seriously worried about the complacency of IFAs. Indulged beyond measure, flattered by the fund managers that pay their bills seem oblivious to the conflicts of interests they court .
An accountant I spoke to over lunch discussed what could dent the complacency that was obvious everywhere I looked. Around one in ten of the guests were women, I don’t think I spoke to anyone under the age of 50, there was little diversity of nationality or race, this is a club and- from what I could see – an exclusive one.
The trick in selling to this club is to remind them- slide after powerpoint slide – of how wonderful the club is and how much value it brings to the 6% of the population it serves.
The most extraordinary example of this grievous sycophancy came in the form of research presented by Dimensional, I don’t have the digital slides so you’ll have to make do with photos.
Utterly bizarre! We pay advisers a wealth tax for ‘a sense of security and peace of mind!” pic.twitter.com/HCSv48244U
— Pension Plowman (@henryhtapper) October 15, 2019
It’s not just the advisers that need stroking, it’s the clients. These results are from the entire survey conducted by Dimensional but it’s possible to break down the clients of advisers between those who are fans (promotors) and those who are more sceptical (detractors).
Those who are sceptical about IFAs measure them by outcomes. The fans ignore outcomes and measure IFAs on soft factors pic.twitter.com/KHi70bXEsj
— Pension Plowman (@henryhtapper) October 15, 2019
One of the IFAs in the room thought being totally unaccountable for outcomes a good thing on the basis that “outcomes always disappointed”. In doing so , he neatly turned logic on its head so that the failure of the IFA to meet the client’s expectations became a failure of the client to expect the worst.
But who cares? IFAs have an endless stream of customers lining up to get some peace of mind from knowing what they’ve got, The cost of these financial placebos is a wealth tax equivalent to around 25% of the expected growth on a portfolio, which – since it’s taken out of the investment, means that the outcomes are under-performing of necessity.
Small wonder , those who don’t rate their IFAs are pointing to the state of their finances rather than their “financial wellness”.
And what needed to be said – and was said – was that the highest net promoter scores in financial scores have related to SJP.
A state of torpid complacency
I had thought that the PLSA (which I am visiting next) marked the extremity of self-indulgence but I’m now not so sure.
The ongoing love-fest between asset managers and their distributors – the IFAs – which went on pretty well 24/7 was quite perplexing. I really thought RDR , the retirement outcomes review, the asset management study, CP19/25 and all the other FCA remonstrances would have knocked some sense of pride and integrity into these jamborees, but this is not the case.
It is small wonder that IFAs are so smug and so arrogant on social media. They are fed lies by the packetful – lies are like their pork scratchings, they guzzle them without even noticing they’re being fattened up.
I do actually think that IFAs have overtaken the PLSA crowd for lassitude , indolence and myopia and that is saying something.
But tomorrow is another day and I have still to see the baying institutional hounds in Manchester.
More of this in a few hours time. Now for a read of Robin Powell’s dissection of Woodford, on the day when Link turned against him.
New from The Evidence-Based Investor: A landmark day for British fund management https://t.co/ySTyRc0WLr #Woodford #HargreavesLansdown
— Robin Powell (@RobinJPowell) October 15, 2019
And here’s a golden Oldie that reminds us how it all began!
