Reports of the demise of the IFA have been greatly exaggerated

I wrote this blog a few weeks ago and  decided not to publish it, but after Standard Life’s recent announcement I decided it should be resurrected. I’m a relative newbie to financial services, having only joined the industry in 2008. I have no fond memories of A-day, I’ve never worked for the Pru and enhanced allocation bonds are as familiar to me as string theory.

When I first joined the profession and started work for a life office as a broker consultant I walked straight in to the RDR storm. My first days were spent on a team building event and I remember the evening in the bar where talk of advisers being forced out of the industry in their droves and life offices buying distribution dominated the conversation.With the Old Mutual’s acquisition of Intrinsic and Standard Life moving into advice it seems that one part of that prophecy is coming true, but I couldn’t help thinking that it wasn’t the first time I had heard the soothsayers predict the demise of an industry prematurely.

Back in the late 90s I worked for a car dealership in central London; it was a tough market at the best of times. As an industry we were already struggling with profitability and our branch was making a loss of £59 on every new car sold. As if there wasn’t enough to contend with, the introduction of the Euro meant imported cars were cheap, block exemption meant anyone could service them and internet brokers were undercutting us. The death knell sounded for car dealers with their huge showrooms. But it never happened and I don’t think it will ever happen to our profession either, despite the competition from D2C services and providers.

For Christmas my other half booked me in to have a jacket tailor made, not in Jermyn Street mind you, but with a travelling tailor from Hong Kong. It was a thoroughly disappointing experience. There was no rapport built, no advice or suggestions on fabric or style and I was out in 10 minutes, with a considerably lighter wallet. To say I had buyer remorse was an understatement.

In contrast my car is now getting a bit long in the tooth, so I decided to think about changing it. I’ve never bought a new car before and never intended to, in fact I have a loathing of car sales executives (think reformed smoker). However, the chap I met was patient, answered my objections, presented the benefits and slowly held my hand down a path to the sale I had never meant to happen. This was a bigger commitment than the jacket (which I have now cancelled) but I never once doubted my decision.

So what’s the moral of this story?

Cost only becomes an issue in the absence of value. People will always pay for something that represents good value. Provide a great service to your clients, offer the peace of mind that someone is stood shoulder to shoulder with them, build trust and a long term relationship and the future should be bright for us all. Selling isn’t a dirty word, but actually a lost art form. Granted we shouldn’t be flogging products, but we should be selling our service, selling peace of mind, selling our value and most of all selling ourselves. I believe the biggest issue our profession faces, bar regulation is not D2C, the internet or competition from providers, but as an industry our own self-belief in the value that a quality planner can offer.

“It’s unwise to pay too much, but it’s worse to pay too little. When
you pay too much, you lose a little money – that’s all. When you pay
too little, you sometimes lose everything, because the thing you
bought was incapable of doing the thing it was bought to do” John Ruskin

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One thought on “Reports of the demise of the IFA have been greatly exaggerated

  • A great blog, Ian. I couldn’t agree more with the moral of the story.

    I do a lot of seminars at work, mostly for retiring individuals and one of the topics on our agenda is ‘Seeking financial advice’. For this, we would normally include hard facts such as the differences between independent and restricted advice, but more often than not, the delegates ask me about soft facts like finding the right adviser for them.

    Not a straightforward question to answer, but I always suggest that it is really important that the adviser they choose to deal with should be someone they like, they get on with and one that they feel they can trust. This is because I truly believe a relationship with a financial adviser/planner should be a long-term one and you can’t (or shouldn’t, at least) have a long-term relationship of any sort with someone you don’t like.

    It has been said many times before – people buy people, not products or services they are trying to sell.

    Reply

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