I have used the services of accountants and solicitors throughout my career both personally and commercially for my businesses. I am, myself, an ex-accountant. Throughout my life, accountancy and law have both been held in higher regard than financial planning and, up until the last 10-20 years, rightly so.
Financial advice back in the seventies and eighties was very unprofessional and highly sales-oriented. It was commission-based. You could be a milkman one week and a financial adviser the next week after just a few days’ training, if that, sent out on the road to sign up your relatives, friends and acquaintances to buy life insurance, endowment savings plans and investment bonds from whichever insurance company you represented. There was scant “training”, no qualifications were required, you would be paid commission which was not disclosed to customers and you were driven by targets. It was a very unprofessional, unethical and largely sales-focused career. Basically, it was cowboy country.
The Financial Services Act was introduced in 1986 and became legally effective in April 1988. Ever since then financial services have become increasingly regulated and professional. Subsequent Acts of Parliament and further regulations have caused financial planning to become a profession within an industry of financial product providers.
I, myself, am highly qualified as both a Chartered and a Certified Financial Planner as well as a Chartered Wealth Manager. My company, Wealth And Tax Management is a multi-award winning firm of Chartered Financial Planners.
Financial planning is now a true profession. We are no longer paid commission as we charge adviser fees instead. We have to be highly qualified. In addition to this, advisers have to maintain our high standards of knowledge and experience by undertaking annual Continuous Professional Development, CPD, for at least 35 hours every year.
The trouble is I am not convinced that the UK public realises what a major transformation has happened in financial services and that the transformation has been largely for the public good.
One of the unusual aspects of the financial planning profession is that it is largely an optional service. Let’s face it, if you are going to buy a house you will almost certainly need to appoint a solicitor to do the conveyancing. If you run your own business you will probably need to appoint an accountant. A number of legal and accountancy services legally require you to appoint a solicitor e.g. the drafting of a trust deed or an accountant e.g. to conduct an audit. Whereas there are very few areas of financial services where you are required to appoint an Independent Financial Adviser. Advice on final salary pension transfers where the transfer value is higher than £30,000 is one of those few exceptions. There are far more areas of law and accountancy where you are legally required to appoint a professional or you feel the need to do so, than in financial services.
As a consequence what I, and others, have noticed is that most solicitors and accountants tend to be reactive whereas most financial advisers tend to be proactive and it’s little wonder why. Without being proactive, financial planners would struggle to get business unlike their fellow professional counterparts.
What has also resulted is that financial planners usually offer far more added value than accountants and solicitors who are largely fulfilling functional, administrative, regulatory or legal requirements which do not add any real value rather than increasing a client’s wealth, reducing their tax bill or protecting their dependants like a financial planner typically does. There are of course exceptions to the rule but, in my experience, they are rare. I have myself benefited from some excellent advice at times from both solicitors and accountants over the years which have added value but the vast majority of the fees I have paid to them have been for services that have added little or no value.
Anecdotally at least, and based on my own experience, financial planners add significant value to their clients. Added value of three to four times what we charge clients in fees is not uncommon and in some cases, it is significantly more than that. By any measure that is fabulous value for money for clients.
As an example, if a client were to pay us, say, £25,000 in fees over a 10 year period, the value we would typically add is £75,000-£100,000. If a client were to pay us instead £100,000 in fees over a 10 year period the value we would typically add will be £300,000-£400,000. These are significant numbers.
How are these value added figures calculated? We use a value added checklist which lists eight areas in which value can be added such as extra investment returns, personal taxation savings, care fees saved, borrowing costs reduced, business taxation savings etc, etc. It’s a long and detailed list.
We are very proud to be in what I consider to be the best profession in the world. One that is proactive, one that includes regular ongoing reviews and one that adds huge value to clients. The profession of financial planning. If you would like to achieve added value of three to four times what you pay in fees for financial planning advice why not contact an Independent Financial Adviser for a no obligation chat about your financial position?* You know it makes sense.
* The value of your investment can fall as well as rise and is not guaranteed. The contents of this blog are for information purposes only and do not constitute individual advice. You should always seek professional advice from a specialist. All information is based on our current understanding of taxation, legislation and regulations in the current tax year. Any levels and bases of and relief from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. This blog is based on my own observations and opinions.