It is fitting the show is sponsored by M&G. As Chelsea devotees know, the more you tend your garden, clearing the weaker seedlings and encouraging the stronger ones, the better the results. The same is true for investing.
But how valued are the garden designers – or in this case the financial advisers?
Hardy perennial Brian Dennehy of Dennehy Weller told me business was blooming.
He made the decision to raise fees with the advent of RDR, and every single client accepted this.
There is a simple message here – and some of us have been giving it for years. If you put a value on financial advice, then clients can make their own decision as to whether they are getting value for money. Mr Dennehy’s clients clearly feel they are.
Adrian Lowcock of Hargreaves Lansdown clearly felt more like a tender annual exposed to the elements in early spring while others remained in the greenhouse.
And he admitted there could be some more pruning and shaping to do. Like me, he thinks it could take as much as two years for the self-execution market to settle down.
But he makes a forceful and fair point that the service levels at Hargreaves are exceptionally high and expanding.
This appears to be the way the market is developing, with Hargreaves positioning itself as the Waitrose or Marks & Spencer of the self-select world – with pricing to match – while others fill the roles of Tesco, Sainsbury, Aldi and Lidl.
The question is whether those in the middle will be squeezed, as has happened with supermarkets.
What is clear is that this is very much a developing market – something that is also clear from the growing number of IFAs choosing to go restricted.
Sterling McCall – a 26-adviser firm – last week revealed it would eventually become restricted.
It is aiming to bring in total cost to clients of less than 2 per cent, including its own fees.
This fits firmly into the idea of a pyramid of advice – the more you want, the more you can expect to pay.
Those prepared to go it alone can also expect to pay more for higher levels of service and more information.
If you put a value on financial advice, then clients can make their own decision as to whether they are getting value for moneyWhether individuals opt for a garden designer, a person to mow the lawn and prune the shrubs occasionally, or prefer to get their own hands dirty is down to them.
But they will be able to judge the level of service they want, know what they are paying, and can judge for themselves on the results.
Banks, leopards and spots…
There is a hint in the Financial Ombudsman’s report that investment businesses are getting better at putting things right – while banks remain as bad as ever.
Dig into the figures of upheld complaints and you see the numbers on certain investment products have remained broadly the same, or have been falling, since 2011.
Investment bonds have seen the biggest fall from 60 per cent in 2011 to 37 per cent now.
Whole-of-life and savings endowments upholds have fallen from 32 to 21 per cent.
But look at bank current accounts and the trend goes the opposite way, with uphold rates rising from 28 to 40 per cent. This suggests that banks, like leopards, cannot change their spots. They have simply changed their diet.
Consumers need protection
In his latest pensions commentary, Ian Naismith of Scottish Widows refers to The Blunders of Our Governments by Anthony King and Ivor Crewe. In particular, the introduction of personal pensions based on the conviction that individuals should have freedom over their retirement planning.
The parallels with today are obvious. Mr Naismith highlights the debacle of inappropriate transfers and opt-outs from defined benefit pensions which happened two and a half decades ago, largely because no-one took full responsibility for consumer protection.
As he says, the concept of the personal pension was a good one, but aspects of the implement-ation were disastrous. One was the lack of consumer education. Few people then realised the true worth of their pension.
The other was greed of insurance companies and their salesmen – whether employed or masquerading as IFAs.
Mr Naismith says that consumers need to be protected from making bad decisions. They also need to be protected from bad advice.
Tony Hazell writes for the Daily Mail’s Money Mail section
t.hazell@gmail.com
