Next year could prove a pivotal one for financial advice. New challenges have been emerging over the past year and others are fast approaching.
Among these will be the increased competition from do-it-yourself fund selection services with simplified advice such as Nutmeg and Money on Toast.
The promotion of “free financial advice” from Money on Toast will undoubtedly stick in the craw of many advisers, particularly as those who use the service to buy funds face an ongoing advisory fee.
These sites are here to stay and more will emerge.
Perhaps the most prominent threat is from Fidelity Personal Investor. Fidelity has used the changing financial landscape to become involved in every aspect of personal finance, and it is doing it well.
Its low charges and online investment tools make DIY investing as straightforward as it is likely to be.
These sites tread a perilous path between guidance, simple advice and true advice, but they are undoubtedly satisfying a need.
Then there is Aviva, which increasingly appears to be targeting the self-investor who wants a bit of hand-holding.
Hargreaves Lansdown has long proved that some investors are more than happy to go their own way.
But these solutions are aimed at a different breed of less sophisticated investor who wants some guidance but cannot or will not pay for full advice.
At the moment they are in their infancy. But they are targeting a generation who are comfortable doing their business impersonally online. Indeed many prefer to do things this way.
Currently the sites are probably, in the main, picking up people who might otherwise have been targeted by bank salesmen. But this will not always be the case.
There is a clear risk that financial advisers will be ghettoised into offering advice only to a select band who have the time, money and inclination to sit down and talk about their money.
There is a clear risk that financial advisers will be ghettoised into offering advice only to a select bandThe market potential is huge at the moment for those who can convince investors that what they offer can justify paying fees.
Whether advisers can grasp that opportunity or choose the niche route remains to be seen.
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Banks on probation
This has been a challenging year for me personally. My mum died in the summer. She was 92 and for some years had been living with dementia, but nothing prepares you for the loss.
This gave me, as joint executor, first-hand experience of how the financial services industry deals with bereavement.
And what a mixed bag it proved to be.
Full marks to Royal London, Virgin Money and Equiniti, all of whom handled affairs efficiently and sympathetically.
But her bank left me tearing my hair out. I am not going to name it because I have since spoken to other people who have had worse experiences at the hands of other banks.
To summarise, we were incorrectly told that we did not need an executor’s account and I had to press to get one opened, then documents were sent to the wrong address, a payment was bounced from the account and finally a large sum of money was sent into the wrong bank account.
Then to my utter astonishment probate documents were photocopied to be sent to another branch which would then send them to the bereavement centre. Clearly scanners and email have not yet caught on in the banking world.
A close friend, whose uncle died recently, told me she spent nine hours with the bank trying to open an executor’s account, being sent to different branches and given incorrect information.
What has become clear is that training of branch staff in this area is woefully inadequate – even though banks must deal with probate and executorship on a frequent basis.
Bereaved people need support, professionalism and simplicity. Instead they are faced with incompetence, ignorance and complexity.
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Satan’s little helpers?
What do you call someone who is giving guidance but not advice? That is the conundrum over retirement pension guidance.
We are talking about people who may not have any formal qualifications and will only have on-the-job training.
Calling them ‘guides’ conjures up a bit too much dib dib dib, dob dob dob.
Advisers is really right out.
Words thrown out by an online thesaurus include aide, counsellor and consultant. Though some of you may prefer the alternatives offered such as tout, buttinski and second-guesser.
I will wait with bated breath, though if you have any ideas I am sure the FCA would appreciate a postcard.
Tony Hazell writes for the Daily Mail’s Money Mail Section
