I recently followed a really interesting debate around whether a financial adviser should be restricted, independent or chartered. There was also a debate around what service is and to some this centered on products.
This debate sprung out of a recent survey which asked people questions around restricted and independent advice. The problem in my mind is that for many it is not about whether someone is independent or restricted that matters it is all about the service and whether you have faith or trust in them.
Let me give you an example, I have used this many times before. I want a car; do I go to the first garage on the high street and say I want a car? The answer for many is no, what are the stages you go through. You first of all identify what you want the car for, and what money you have to spend.
So for example if you just want a car to run around town in then you are going to look for something small. If you have enough money you might want something new, or you might want something on lease or with a loan. Once you have done your research you will then go to a garage, ultimately whether the garage is restricted to selling just a certain type of car or the whole of the market doesn’t matter it is whether it can deliver on your requirements that is important.
The end decision is likely to come down to what you feel about the garage and the after-sales service.
So what does all of this mean when we look at financial advisers? I have puzzled a lot about whether as a firm we should be restricted or independent. To some extent as a business we are restricted because we have segmented our clients; our service is very much about identifying goals and delivering on those goals. We do use an administration platform and we do create portfolios. We will off course go away from this if we need to bespoke but just because we go down the restricted route doesn’t mean we can’t do this.
Of course we could take the independent tag and speaking to the FSA we can exclude products from our offering if we want and we don’t have to tell the clients this we just have to make sure we record this. Obviously just because we have excluded products if a particular client needs one of the excluded products then we could use it.
Ummmmm, now you see the problem restricted and independent are really the same thing. I read something recently that actually said this will only confuse and really we should ditch this terminology and stick to financial planners. Ultimately we are or should be financial planners. To say service is about products is wrong. Service is about what you do for the client and what the client is paying you for. I have been on a few financial planner websites and cannot find what their service is, I have been on others where the service and philosophy of the financial planner is very clear.
If I go back to the car analogy and apply that to advisers, if I was looking for advice then I am more likely to approach someone whose service and philosophy is clear for all to read.
To be restricted or independent that is the question? The answer well I don’t think it matters, the real answer is what is your service proposition and is that clear to your clients.