IFAs must explore other advisory models to survive and prosper.

Martin Bamford is precisely the spokesperson financial advisers need. He bridges the gap between the worlds people like me and Clive Waller grew up in, a world where “get rich quick” was the primary driver, to a different one, one that allows financial advisers to build businesses steadily with a view to succession and continuity. The succession and continuity should be as much about the client’s experience as the owner’s.

Bamford says SJP needs to “grab the bull by the horns and instigate a root and branch review of its culture”.

“Rather than knee-jerk reactions to negative press reports, SJP should get on the front foot now, repair its damaged reputation and implement positive changes,” he says.

Bamford says the negative reports about SJP have been damaging to the consumer perception of financial advisers, “including those of us who would never associate cufflinks or cruises with our roles as financial planners”.

With impeccable timing, two hours after I published this econium to Martin , Professional Advisor announced he was walking away from advice – did he read the headline?

I was working in Allied Dunbar when SJP set up in the late eighties, I vaguely remember being approached but I ended up becoming an IFA – which I made a total hash of.

All my mistakes came from wanting to make the sale ahead of wanting to make a client. If I had listened to good advisers of my age, like them I might still advising.

SJP went on to repair the damage that was being done to the Allied Dunbar brand and it did indeed implement positive change. Throughout the nineties and naughties, SJP was ahead of the curve and it has now grown to be a business respected by the markets, its clients and the regulators. I have said it here and Paul Lewis has been saying the same, SJP imposes a wealth tax on those who want to be in its club and clients who pay that tax generally do so willingly -even gladly.

But the world moves on and SJP must move with it.


Complacency is the biggest threat to IFAs and SJP alike

When I spent a day with IFAs in Hampshire two weeks ago, I was struck by the complacency they showed. Several times I heard independent advisers accept praise for being independent – rather than vertically integrated – and SJP was several times held up as the bad guy – the rotten apple.

I ran into trouble last week for comments I had made in a previous blog about IFAs who condemn robo-advisers who offer a supported service based on a customer using a web or phone application.

Ironically, this adviser was billed to talk about hybrid models – my concern is that no-one left on the rosta of a conference about innovation, wanted to innovate.

It is a sign of a self-confident advisory community that they accept diverse approaches to the delivery of financial advice , rather than dismiss other approaches than their own – out of hand.

It is SJP’s marketing and customer care that have made them the pre-eminent advisory firm in the UK today. Their products may be sub-optimal – too expensive and overly reliant on star fund managers, but that hasn’t and won’t stop them. Clients can be very forgiving – where the bond with the adviser is strong.

I do not think that Martin Bamford complacent, nor Al Cunningham or Dave Penny.  I think they have much to learn from SJP in terms of building a long-term business and I fully expect all three of these guys to be around in 20 years, having learned such lessons.

The lessons from the new

IFAs have much to learn from SJP and they have a lot to learn from robo-advisers too. The really smart robo-advisers don’t advise at all, they simply make it easy for clients to make decisions that work for them and for the firms they execute with. That’s the model I see working for Anthony Morrow and Evestor, Romi Savova and the excellent young pretender Multiply.

I complained recently that I had been jocked off the speaking rosta at a conference that purported to be about robo-advice but ended up promoting “hybrid” solutions. As far as I could work out, the event was designed to show that IFAs had already embraced robo-advice – by adopting social media and using digital recordings as part of its compliance process.

One IFA was keen that I distanced his firm from robo-advice, even though he had been promoted as talking as a “hybrid” adviser. As Ian Taylor says in the interview below , show me any firm that is not embracing technology in some way.

But using technology to make an existing business more effecient- does not mean you are innovating, you are simply riding someone else’s wave.

I applaud IFAs who reinvigorate their businesses using latest technology but – as with SJP – the trick is to learn from and work with the robo-advisers, not to turn up for a day out to listen to yourself.

The great innovators in the advisory space have been people like Ian Taylor of Transact. They aren’t sitting back and applauding themselves. Listen to Taylor in this interview.

The advisory pathways of the Multiply app are – by way of example – ideal for people who do not want to spend time with advisers, but have problems that need advice.

As with SJP, these types of people are suited by a different model to that presented by the mainstream adviser. I’ll repeat myself by saying that the way forward for financial advisers is to recognise the diversity of business models and to accept and even recommend robo-advice , when it suits someone.


Clive Waller is a wise man

Clive is quoted in the same article as Martin Bamford  – saying the same thing.

Clive Waller says the bad press hitting the three biggest brands in financial services – SJP, Hargreaves Lansdown and Neil Woodford – has left a dark cloud hanging over the industry.

“There’s nothing going on that makes us look good,” he says.

The long-term impact to SJP’s business will be marginal, he thinks, it’s the rest of the industry that is going to suffer.

“The combined effect of what you call the scandals or bad news that’s coming from around the industry generally, I think will be a negative. If I was building a new business, I’d be looking at passive funds, I’d be looking at non-traditional forms of advice, everything to get away from the way it works now.”

Like me, Clive has seen mutation in advice before, we can remember SJP being the new kids on the block, Hargreaves Lansdown picking up the Equitable Life customer base and we can see that IFAs are going to have to adapt to the new if they are going to survive.

I folded my IFA business in 1992 and became an employee of a successful employee benefits firm. It is only now , over 25 years later that I can see a business model emerging that provides mass-market advice and guidance in a responsible way. I see it emerging with firms that aspire to 9.5+ Trust Pilot scores, who offer an end to end digital process and who focus on working with – not against the prevailing forces in the market.

web of trust

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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