Full, whole-of-market, independent advice is the gold standard of financial planning. I have always said that.
But one of the great problems of this world, and one of the things that I find the most tiresome, is the insistence of some people that no one else can use the word “advice”.
If you look at Twitter (echo chamber as it is) you forever get advisers picking an argument with anyone who dares to offer an opinion on a fund, the stock market, or any financial product.
So let’s be clear. You do not own the word advice. No one does. Ironically the more you fight over the use of it, the more the value of it becomes downgraded.
I can understand the battle to cling to this word, first as a matter of principle and secondly from a regulatory point of view. Both are equally pointless and misjudged.
We all know what the rules are with regards to regulated advice, so let’s not wander too far down that path – although I will say this, that many small companies, in particular, get very confused about the difference between offering an opinion on an issue and individually tailored recommendations. It is putting up red tape where none actually exists.
So let’s concentrate on the existential battle going on for the right to use the word ‘advice’.
We have had the same thing in journalism, and the challenge and the mistakes made are similar in many ways to the problems of financial advice.
Journalism’s greatest error came in the early 2000s when we were wrestling with how to deal with the internet.
We thought that we could simply put stories up on the internet and get money from display advertising in exactly the same way we did in newspapers.
Not so. Once we started to give away stories for free people got used to it and it made it very hard to argue that you should charge more. Particularly as this came at the same time as the rise in the BBC’s online service which is free (of course, it is not; it just feels that way).
And of course, the great social liberation of the internet meant that anyone could pretend to be a journalist offering news (true or fake) and start blogging, which downgraded the skills you actually need to be a journalist, and meant anyone could pretend to be one.
Now if you think about what happened with polarisation and tied sales, you have a similar problem in that it downgraded the value of whole-of-market advice – though no one appreciated this at the time. On top of this, trail commission meant advice looked free, even though it was not.