With Banks like Barclays Capital saying that: “£150,000 is becoming an approximate cut-off point for the provision of face-to-face advice, with the fee structure for personalised advice heading towards an ongoing 1 per cent of assets under management.” See Link . That leaves 80% of the UK’s adult population underserved.
I think that leaves 40 million adults in the UK vulnerable to the “Two Miss’s You Don’t Want to Meet”: Mis-selling and Mis-buying!
The often quoted alternative to face-to-face advice is on-line platforms. Here investors take their financial life into their own hands and play the markets with an array of investment choices. Supported only by a sway of marketing hype about which managers perform best. The truth is few if any consistently outperform the markets, and after charges it is questionable if any do.
The support tools are uninspiring spreadsheets, pie charts and graphs, as if planning your finances was all about the numbers. It’s not of course, it is meant to be all about you the investor. But, the money people find it challenging to move themselves from a product mind-set, and it’s all they can talk about.
Every face-to-face advice conversation these days seems to be about protection insurance, where the adviser can still get commission after it was banned on investments in 2013. I heard that shareholder protection is a must have, as if the director dies then shares pass to the spouse, who could marry a fool. And, if the spouse dies that leaves the fool as a key stakeholder in your business. I’m not saying that couldn’t happen. But, look at all the what if’s. Now consider the probability of that happening, compound that probability with the risk of the event being insured and consider whether it might not be better covering the risk from your cash reserves.
I’m not sure the industry has learned it’s lesson. When will advisers and providers learn to treat the client as their customer, rather than their money.
Did you see the Telegraph article “We lost everything gambling on shares…” See Link. This is the fait awaiting the 40 million underserved. No amount of regulation or simplified advice (read product selling) process is going to stop people mis-buying products.
The fact of the matter is, there are too many people running financial service firms who themselves have a money problem. I call it over-identifying with money.
People who have learned or ancestral patterns ingrained in them that “we are our money” are drawn to have positions of influence in the money industry. They tell everyone else what to do with their money, and make a tidy profit in the process. This is at the core of what is wrong with the process.
So what’s the answer. Education. Not money education, but education on skilful thinking about money. We are not our money. We each are human beings with a life and a purpose. I’m not saying money is bad, it’s a great enabler. I am saying that it’s important to first know what’s important to us, and then use our financial resources skilfully to live a life doing just that. Doing what is important to us.
Only when we all have a wake-up call, and the money over-identifiers do not control positions of power and influence, can we change things. We can start with education.
To avoid the two Miss’s you don’t want to meet, first plan the life you would love to live, then take a look at the money. Learn about money, so that when you are orphaned by the financial advice industry you can be self-sufficient.
A good place to start is with George Kinder’s book and web-site. Link here. You can’t go far wrong here!