Paul Lewis of Radio 4’s Money Box programme has many admirers among IFAs, particularly for the sterling work he has done in raising consumers’ awareness of financial matters.
While not always an advocate of advisers, and with a fondness for using his articles to set a cat among the IFA pigeons, his comments often contain useful insights.
However, an article from Mr Lewis published recently entitled ‘Why aren’t advisers paid on results?’ is built on flawed foundations.In it, he suggests advisers might have a “genuine stake” in getting the very best possible return for clients if they were paid a percentage of the client’s profit, rather than of the amount invested.
Frankly, this demonstrates that he has a fundamental misunderstanding of the role of the adviser and the whole purpose of financial planning.
The IFAs I have met and worked with over the past four decades have, almost without exception, been dedicated to getting the best outcome for clients and providing the very highest level of service on a continuing basis so their clients can enjoy the security and peace of mind that sound financial planning can provide.
Unfortunately, Mr Lewis appears to equate the highest level of service with the highest amount of profit. Any adviser worth their salt would tell him that this is rarely the case.
The highest level of service means delivering what the client needs and what is most appropriate for their individual circumstances, not chasing performance with all the risks such an approach entails.
Financial planning starts with the adviser getting to know their client and understanding their individual circumstances and objectives which, along with their attitude to risk, defines what ‘results’ mean to them.
In short, he disregards what an adviser does to add value at every step of the relationship with a client.
Mr Lewis’s proposed model is not only undesirable, but also the FCA would have kittens if it was suggested that we unpick all that it – and we – have done to enhance the public’s perception of financial advisers.
I am always happy to discuss the invaluable work provided by IFAs and would be delighted if Mr Lewis wanted to get in touch to find out more about the way the advice process works and why, for most clients, achieving the highest return is not the best indicator of a job well done.
Ken Davy is chairman of SimplyBiz Group