It’s an old adage and, of course, so true that you can’t please all of the people, all of the time. But as a financial planner, part of me wants to.
There will be clients that leave your firm for a number of reasons.
Advisers move on and sometimes the personal relationship that existed with the first adviser cannot be replicated by the second.
Personal relationships are exactly that – personal, between two parties. The new adviser may simply not have what was attractive to the client about the original adviser.
Or there may be a change in circumstances, such as a house move to a distant location. Even thought a lot of meetings these days can be done remotely, many clients still want a face-to-face element and distance can be barrier to this.
Or the advice business could evolve and no longer suit the needs of some clients. There is nothing wrong with this – business evolution needs to happen if we are to remain relevant to the bulk of our clients.
I read Mark Dampier’s recent opinion piece in Money Marketing regarding the difficulty in finding a good investment adviser and it again struck me that you cannot please everyone all of the time.
Dampier didn’t like the fact the advice he received was solely in respect of tracker funds. Interestingly, many of the consumer facing articles I have read advocate the use of tracker funds and keeping costs down (not saying I fully agree with this all of the time) but this approach clearly did not suit this person.
He then commented there was no mention of low coupon gilts and discounts on investment trusts. Investment trusts are often a higher risk investment because of the ability to gear, so, again, won’t suit everyone. And is making a short-term investment in gilts appropriate? We might advocate that if you want to beat returns on cash but to have any chance of keeping up with inflation, you need to be invested in the markets.
By making a short-term investment, you are ultimately making a short-term play on what you think will happen in the markets. You only need to miss the 10 best days’ worth of investing over a 40-year period to potentially half your returns.
Dampier commented that he doesn’t like investment bonds but these can be very suitable for investments within a trust structure, for example.
It made me think about the component parts of what a “good” adviser offers.
We can safely break this down into three parts.
- The strategic financial plan that does the heavy lifting, looks at every aspect of the client’s life, links it carefully to their goals and objectives and provides the route map to financial security and peace of mind.
- The tactical elements of advice, products and amounts of saving and investment. As one respondent to Dampier’s article mentioned, these two areas seem to be what dominates the thinking of many financial planners.
- And then there is the investment piece, which needs to be driven by what was discovered in the planning process.
Investment advice broadly falls into the advisory and the discretionary. We have recently added the ability to have funds managed on a discretionary basis, but I have also moved my invested funds into this strategy. I wouldn’t advise something to my clients that I wasn’t comfortable using myself – so I do still have ‘skin in the game’.
Thinking you can outperform investment managers with an advisory portfolio potentially puts you on a hiding to nothing. There will be times when that portfolio might outperform and others where it doesn’t.
Remember the ‘old fashioned’ advisory approach was often based on picking funds from the back of the good old Money Management magazine. Much was based on performance figures and star ratings and not a lot more.
The investment approach needs to suit the client and one approach, as Dampier found, didn’t suit him. Potentially because with a lot of experience and knowledge about investments comes the likelihood other people’s approaches won’t suit your own. It doesn’t mean that one approach is right and the other isn’t, just that they are different.
Advisers and clients both need to be comfortable with what they have and, as I said at the beginning, you can’t please all of the people, all of the time.
Shelley McCarthy is managing director of Informed Choice
