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Secret IFA: Send in the clones

Secret IFA: Send in the clones

Have you heard the one about the advice firm boasting that their investment philosophy comes from the Nobel Prize winning economist Eugene Fama (or Markowitz/Miller/Sharpe)? I’d be surprised if you haven’t, because when I type that phrase into my search engine, hundreds of firms pop up, all with the same investment philosophy, all with the same words.

It’s laughable really, because while describing themselves as fiercely independent, these firms merely clone the fund manager they’ve metaphorically got into bed with. Since when has the supply side been independent? Be realistic, they say whatever they need to say to convince us to promote their funds so that other people will buy them. For the fund manager it’s like having a direct sales force without all the cost and regulatory issues – nice plan.

I don’t necessarily disagree with the information, but I’d be foolish not to question the messages they want me to use. Simply copying their mantra alongside everyone else makes me look the same as everyone else – and you too.

And who apart from us really cares enough to agree or disagree about the efficient market hypothesis anyway? People looking for advice aren’t searching for Nobel Prize-winning economics, they have more prosaic day-to-day concerns – and no I don’t mean fund charges.

That’s another red herring that too many advisers bang on about despite it not being uppermost in a prospective client’s mind – if it were they’d be going direct and cutting out the charge. Or looking to haggle, and who wants that?

All over social media there are links to articles, blog-posts, infographics and even videos with the same message about keeping costs low, buying passive funds, and active managers being useless (most are).

They trot out the same references and statistics to the same audience of people like them. That’s right, it’s mostly advisers preaching to advisers, because who else cares?

It’s as predictable as quoting Warren Buffet, one of the world’s wealthiest individuals telling everyone to invest in tracker funds. If I were a client I’d question that advice, because Warren Buffet has spent 50 years doing just the opposite. Yes he buys and holds, but not trackers!

What’s needed is more original thought, and then once you have original thought, being careful whom you share it with. The idea that advisers should pool their intellectual capital – why on earth would you? If you’ve got a good idea don’t share it with your competitors. Run with it, and steal the march on them.

You’ll have a head start because they’ll all be busy turning up to each other’s film screening or book launch. And I’ll bet there won’t be a prospective client in sight.