Soft skills will give advisers the hard edge needed to compete against the inexorable rise of low-cost transactional competitors, Steven Martin, director of the Financial Planning Training Academy has said.
He told FTAdviser in the past, the added value in adviser relationships came from their technical knowledge and ability to construct suitable investment portfolios.
“All of which is increasingly going to be provided online or as an online/offline hybrid at unbelievably low cost by institutions that are much more credible and have much better brand value than any IFA has,” he explained.
“To my mind, if IFAs want to have a future, they have to move away from transaction, product selection, fund selection as being their core service because no-one’s going to come to an IFA for that in future.”
He warned advisers that clients will, in the future, get that kind of service from Vanguard’s online platform and pay 35 basis points “for the full thing – for the advice, for the platform, for the fund selection”.
“They’re not going to come to an IFA and pay 150 basis points,” he added.
He warned of a “massive risk” to the traditional IFA model, making him the latest in a long line of market watchers who have tried to caution advisers against being complacent.
“If you want to survive, or indeed thrive, offer something different than a computer can offer, or that a massive institution can offer,” Mr Martin suggested.
Philip Hanley, director and independent financial adviser at Philip James Financial Services, confirmed the importance of interpersonal skills in interactions with clients.
He said that establishing a relationship of trust between adviser and client is more important than ever.
“As advisers, of course we need technical, business and financial skills. But we deal in intangibles – investments and pensions are no more than computer entries these days.
“Just as most interviewees win or lose a job in the first two minutes so, I think, most clients decide if you're OK or not just as quickly,” Mr Hanley observed.
Mr Martin agreed that advisers needed to work with clients on an individual, rather than a product or financial, basis.
“You can work with them to use the financial resources they have available to help them achieve those objectives in the long run,” he suggested.
“Then you’re in a position that’s very difficult for an online solution or a computerised solution to do their job.”
Mr Martin and Mr Hanley were speaking to FTAdviser as part of a guide to adviser soft skills. Click here to read the full guide and bank approximately 60 minutes of CPD.
eleanor.duncan@ft.com
