‘I’ trouble: Should you worry about how you label your firm?
Most people will continue talking about their ‘IFA’ whether that adviser is actually independent or restricted.
Ideally, those clients would recognise this, but unfortunately most don’t differentiate; they just see ‘advice’ and use ‘IFA’ and ‘financial adviser’ interchangeably, just as they do ‘Sellotape’.
Recent Skandia research acknowledged this indifference, showing the general public are more interested in advisers’ qualifications than whether they are independent or not. The labels ‘restricted’ and ‘independent’ should mean something – even if the concepts behind them are less straightforward – but people are more likely to be impressed by an alphabet soup of letters and numbers that must be meaningless to a lay person.
‘Restricted’ implies limited and narrow; ‘independent’ implies free-thinking and strong. These are words any educated person will understand. But they pay little attention to the distinction, preferring instead to be dazzled by qualifications, even if they have no idea of what an adviser has had to do to earn them and don’t know their Certificate in Financial Planning from their Certified Financial Planner.
It is important to ensure the public appreciates the difference between types of advice available, but we need to engage and educate them rather than changing labels that they pay no attention to anyway.
The focus has always been on what we as an industry tell the public; we might achieve more by making sure they are listening.
Jon Cudby is editor of Money Management