There is always room for improvement but one key area the profession could focus on is transparency with fees, according to Jonathon Clarke, managing director at Clarke and Co.
Speaking to FTAdviser as part of our Coffee Corner series, Clarke said in line with regulation, fees should be better documented to prevent people being surprised about the amount of fees they have to pay.
How do you think the industry can do this?
He explained clients often go from the initial advice to the implementation when they have been given the report.
“It has to be clear from the fee agreement. At Clarke and Co initial advice is a fixed fee. A percentage fee makes it hard to gauge how much a person is paying so there should be a fixed fee for initial advice to ensure there are no concerns.
“That’s what the fee for the advice is and there are no surprises.”
Clarke said this is an area he believes the industry is still not up to speed with, with lots still charging percentages for initial advice.
How did you start out as an adviser?
Clarke said after graduating from university, he went to work as an estate agent to earn money to go travelling.
He said he got into the profession due to the mortgage advice aspect of the industry.
“At the time someone advised about financial advising. They said do mortgage advice first because if you are unable to give advice and communicate with people, then there's no point in going into financial advice,” he said.
Clarke went on to sit the financial exams and joined Abbey National bank, Santander, where he received training for independent financial advice work.
“After the bank, I went to work for a small local IFA and then joined a larger IFA practice. I later went to an accountancy practice, and then went to the firm I was at previously before setting up on my own,” he said.
“It's been a journey. I never set out from day one to be a financial adviser.”
Did you ever end up travelling then?
“No, I never did, “ he laughed.
“It's one of those things, once you start the exams, you just keep going.”
What would you say has been the biggest change in financial services?
“It’s a lot more professional in terms of everyone striving to get the chartered qualification,” he said.
“It's more about advice now, and not as much about just selling plans or products, which when I joined the bank, that's all you could advise on,” he said.
“You could see change coming with RDR and now with consumer duty. That's another positive step for the industry.”
Clarke explained that now, it is a lot more about relationships and the service being provided to the end client.
“That's how I ended up doing what I'm doing now,” he said.
“When you work for banks or larger practices it’s about bonuses and new money targets so client relationships aren't really the focus if you're wanting to earn money.
“That might have changed now.”
Can you name one to three things that you would have liked more help or advice on when you first started out?
Clarke explained there was a need for more training in terms of the engagement with clients as opposed to just fact finding skills.
“Everything’s tailored to the textbook. But there needs to be more training around listening to what clients actually need."
“It's more about softer engagement with clients who understand what they want.”
When Clarke first started out he said there were no adviser academies around to help with becoming an adviser.
But nowadays many people go through the paraplanning route first, whereas he went straight to become an adviser.
What would you say are the biggest challenges facing those starting out today?
“Regulation and PII costs,” he said. “Fortunately, I've not done DB transfers but I know the cost for firms just continues to go up which you can appreciate because of the risk.”
Clarke explained that regulation, even for small firms, is going to increase fees substantially and that could add risks to those businesses.
“That’s the reason for myself taking the baby steps with Clarke and Co to grow organically,” he said.
Lastly, what is the one book that you'd recommend to anyone considering a career as a financial adviser?
“The Chimp Paradox because I'm very much into sport and that mindset, which is necessary to have especially being a business owner,” he said.
He explained it is about having the belief and confidence to do things and that is key in the early years of advising.
If you own your own advice firm and would like to get involved with the Coffee Corner interview series, contact deputy news editor Sonia Rach via email at sonia.rach@ft.com
