Who Wants to Be a Millionaire? goes the famous song written by Cole Porter for the 1956 movie High Society. It was no surprise the refrain was: “I do.”
For many, becoming a millionaire is a dream – a passport to a world where money is no object.
Many believe millionaires have everything they could possibly need or want, but it seems plenty of them have regrets. A new piece of research suggests that what many regret is not having decent financial plans on their way up the millionaire ladder.
International wealth manager deVere group researched more than 650 millionaires among its client base and asked them what their number-one financial regret was and 57 per cent said not devising a reviewable strategy for their personal finances.
The second biggest financial regret, said the millionaires, was not consistently scrutinising personal investments, and the third was taking on too much unnecessary debt.
The survey, published last week, reminded me that good personal finance advice is a valuable commodity whatever your level of wealth. The survey found other regrets among wealthy individuals, such as making costly mistakes, choosing the wrong investments, lack of financial discipline, not saving enough to fund children’s or grandchildren’s education and so on.
The survey provides a useful insight into the minds of the wealthy. While we may imagine them to somehow be super-beings drowning in cash, the reality is that they are mostly just like the rest of us, albeit with a bit more loot in the bank, and many need a decent financial adviser. They make mistakes like everyone else.
deVere says it believes the survey’s findings would likely be just as applicable further down the income scale among the mass affluent or middle-income earners who are comfortably off but perhaps aspire to be millionaires. Now it might be assumed that the middle-income and lower-income brackets are not that interested in financial advice, something I have heard recently from several advisers, but the viewing figures for one recent TV series suggest otherwise.
The ITV show featuring Martin Lewis, the ‘money saving expert’, has been pulling in some very decent viewing figures, perhaps surprising many who did not believe a programme about money could work in peak-time viewing.
Shows have typically been attracting between 3m to 3.5m viewers. That is not far off half the number who watch the leading soaps such as EastEnders and Coronation Street and suggests the appetite among the general population for personal finance advice, or at least tips on managing money better, is higher than many in the retail finance sector believe. So it is not just millionaires who need a financial plan.
All this suggests that the services financial advisers offer are not niche or specific to a small, golf-playing population in their local areas, but widely respected and very widely sought among most income brackets.
Of course you may disagree with my views and do not forget you can add your comments on this column at www.ftadviser.com/fa or email a letter to the editor of Financial Adviser.
Lots of comments were made recently on one column I wrote criticising interest-only mortgages. One commentator suggested that the individuals who bought interest-only mortgages well knew the risks they were taking.
Perhaps they did but I wonder how many of the advisers who sold the loans pencilled in reviews of their advice after two, five, 10 years and so on? This lack of ongoing financial planning and regular review of advice has often been at the heart of many of the mis-selling problems of the past. Advice given in 1995 on a product designed to last for 25 years may have been completely wrong by 2005. It still amazes me how few advisers consider offering meaningful annual reviews to clients.
This seems, ironically, to be exactly the sort of service that millionaires want: good, robust initial advice followed by regular reviews to ensure everything is on track or not, as the case may be.
Well-qualified professional financial advisers have a good future if they can shift their model towards regular reviews of clients’ affairs and recurring fees, and away from one-off advice or sales that may later come back to bite them.
Well-qualified professional financial advisers have a good future if they can shift model towards regular reviews of clients’ affairs and recurring feesFor this to happen, however, we have to get away from the mentality that once shifted, financial products can be forgotten. This is a pre-RDR mentality and just will not wash in the new world where clients will demand a professional relationship with their advisers running to many years or even decades.
We generally keep the same dentist or GP for many years and this practice needs to permeate the financial advice sector. What is good for our health should be good for our wealth.
Kevin O’Donnell is a financial writer and journalist
