“Peace of mind” – the new commodity

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“Peace of mind” is the new commodity that can be sold by anyone, anytime, anywhere – especially if  you are a financial adviser. It’s the talisman of “financial well-being”.

Mercer Money has been designed to support better financial decision making and help improve people’s lives today while giving them peace of mind that their future needs are met.  Corporate Adviser – Mercer launches Financial Well-being Platform

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.  Henrytapper.com IFAs are living the life of Woodford.

It doesn’t much matter if you are a one man vertically integrated wealth manager or the mighty mercer, you can peddle “peace of mind”.


A trouble shared?

peace-of-mind

Whether with a wealth manager or the Mercer app we are being asked to share our financial and life goals with third parties

As  Chris Budd puts it on the Ovation website

we encourage our clients to accumulate life with their money, not the other way around

This kind of openness is not for all, especially when the third party is your boss.

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What is on sale here is a kind of hand-holding that I’ve seen people like Chris Budd, Al Rush and Charlie Goodman carrying out quite brilliantly. It is undoubtedly worth it and I’ve no doubt that the good people at Mercer thoroughly believe in their product.

 


But outcomes matter more..

Show me the value

I’m going to be within two years of being 60 tomorrow and my financial wellbeing is dependent on the outcomes of the money I’ve saved, the defined benefits I’ve accrued and my capacity to carry on working.

The outcomes of my saving matter to me more than mentoring, counselling and goal-setting.

Show me the money.

The money I have now  has been  diminished by the various commissions and fees paid to all the people over the years who I’ve employed to help me to the eve of my 58th year and do you know what, I am not of the view that I got much value for all this advice I paid for or the advice delivered me in the workplace by well-meaning bosses.

To all those who want to sell me “peace of mind”, I can share a piece of my mind. Please don’t patronise me – let me be – and show me the money that I have and how  I can use it to get myself a wage in later age.

I have no idea about the overall cost of all the advisers who’ve had a bit of my later life , even less – of the value I’ve got for this money. It would be great if someone would show me this money.


In one word – I want “accountability”

Will Robbins and Charlie Goodman and I sat down in Citywire’s Vauxhall Walk offices to discuss whether you can really sell “peace of mind” as a financial commodity.

After 50 minutes of passionate debate, I was asked by Will to give one word that would convince me that peace of mind could be sold as it is being sold – as a financial commodity.

That word was on my lips from the moment the discussion started.

If you are prepared to be accountable for my peace of mind – today and tomorrow – you can sell me your capacity to deliver it.

And if you are using “peace of mind” as a hook on which you sell me your services , I demand some evidence that my happy today will translate into a financially secure tomorrow.

Right now – I remain deeply sceptical.

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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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3 Responses to “Peace of mind” – the new commodity

  1. Brian G says:

    Hi Henry. I think there is a debate to be had for sure about the cost of providing financial advice and its constituent parts of creating financial plans, review of said plans, investment planning, tax planning, life coaching, cashflow modelling and forecasting, psychological decision making guidance and hand holding. Financial wellbeing and peace of mind is possibly the most valuable of all of these areas, as it is the outcome of financial advice. We do not live life to have money, we have money to live the life we want. Therefore the outcome of financial planning is to help people realise what they want to do with their lives, and where possible to give people the money they need to be able to afford to do those things. It is also the role of the adviser to help people think about barriers and hurdles to such outcomes by protecting against dying to soon, becoming ill too soon, or living too long. However, an adviser cannot be held fully accountable for the actual wellbeing of their clients any more than a doctor can be held responsible for their patients dying when they catch a disease they didn’t cause, any more than an accountant can be held responsible for their clients going out of business when the economy throws an unpredictable curve ball, any more than a lawyer can prevent their client losing a case when the evidence goes against them. Everything of value to people can be commoditised. Everything that people are prepared to pay for will be sold. The debate is at what price? When considering and pontificating these things however, the blogger should try to first reflect whether their own personal situation is representative of the average client. The average level of general education that OFSTED tend to inspect against is 5 GCSEs at a standard of A-C under the old grading system, obtained at a state comprehensive school. The long term average wages of said people have probably been the equivalent of less than £30,000 per year. They will have no defined benefits schemes, and will have belonged to a Workplace Pension Scheme paying in 8% of their earnings for the last 5 to 7 years, plus maybe a contracted out personal pension worth about £30,000, a small personal pension worth maybe another £50,000 . They may sometimes own their own homes but won’t have a particularly large savings balance. I wonder how close that description of the average person comes to your personal situation? These average people could be said not to understand most of the things financial professionals talk about as though everyone knows about them. The value of the advice, counselling, support and reassurance which good financial advisers give to such ordinary people is not necessarily measurable. But when the Royal London and Longevity Centre research work looked into this, they calculated that the advised customer was on average at least £40,000 better off as a result of paying for and taking advice over the long term. My understanding is that this took into account any fees paid for said advice. So that the outcome was net of all charges for investments and advice. But the term wellbeing is not about where you are it is about how you FEEL about where you are. And helping people FEEL better about where they are is something people all over the world will pay for. Ask all the yoga instructors, personal trainers, life coaches, psychologists and other professionals who work to improve people’s mental health how important it is to FEEL good about our situation and they will tell you that is why they do their jobs. To make people FEEL better. That is NOT about the accountability for the numbers.

  2. John Mather says:

    Henry
    Would you design a system that delivers better than a whole of market Independent Financial Adviser as opposed to a Financial Adviser or an observer giving guidance without implementation

    In the FT article I sent today on the FCA survey FOSS has only 1% of all claims of which two thirds were not upheld

    Maybe you should concentrate your fire power on the source of the 94% of advice/guidance that is causing the 99% of complaints

  3. Eugen N says:

    It is really important to understand what you mean by accountable.

    If that means ‘required or expected to justify our actions and decisions’, I am fine with that. I can justify everything I put into your financial plan, I can justify my investment recommendation to you, not with a crystal ball, but with evidence based investing (even if some of it is active investment management).

    If you are after someone to guarantee the outcome, as you know that is impossible. However, as long as the economy continue to works, the outcome is ‘guaranteed’ by the economic growth of the future! I have no means to influence that, neither you, and if you do not believe in capitalism continuing to work, better disinvest your money and build that nuclear shelter and start pilling on food!

    You may not be in need of a financial planner, having been one yourself many years ago. Although, sometimes I found people who think they do not need us, they are most desperately in need of us. Some have so many biases, that they cannot see the wood from the trees. I have just met an investment manager the other day, who was only after a small job of transferring a DB scheme, and I quickly understood, that he has no plan, no idea what is doing, and more to that an unhappy wife, which could lead to a divorce.

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