'Why I’m moving to an advice-only model'

Having decided that advice is not about the products and investments peoples' money sits in, but is instead about life planning, Brent will operate a fee-only financial planning service which allows clients to manage their own investments.

Brent plans to be up and running with his new business sometime after mid-April, after he has left Raymond James.

Ultimately, I think this is where advice will go in this country.Dan Brent

“The longer I've been in the profession, the longer I’ve been talking to clients, answering clients' questions and really helping clients meet their objectives. You quickly realise it's not about the products. It's not about the investments,” Brent told FTAdviser.

“Most people don't come to you and say, ‘well, what is my return on my investments over the past 12 months?’ They just want to know that they're going to be okay.”

For Brent’s clients, 'okay' means having a plan in place so there is enough money once they reach retirement. “It's about retiring for most people.”

Over the course of the pandemic, Brent started getting more questions from clients unrelated to investments. “I just thought, well that is advice-only planning right there. They’re not talking to me about investments or products.”

Brent studied law at university. But soon after he moved to London, he was made redundant amid the backdrop of the 2009-10 credit crunch. A friend then suggested he work with his firm for the summer, a discretionary fund manager.

“I did all my exams. I worked at a couple of firms in London, so I was really cutting my teeth on high-net-worth, city-based individuals who were time poor and asset rich, too-busy-to-talk-to-you people.”

Increasingly we’re seeing flat-fee advisers. Advisers who charge project fees. Advisers who charge subscription fees.Dan Brent

After a while, Brent started to read around financial planning. “We do the diploma in regulated financial planning, but most people aren't financial planners, really. They’re still financial advisers,” he said.

“I definitely got to a point a couple of years ago where I thought, ‘I don't know if I want to just be selling investment products’. You can make a good living doing that and lots of IFAs are very good at it. But it just wasn't sitting with me.”

“Financial planning, lifestyle planning, life planning, life coaching - it all feeds into each other and ultimately, I think that's where the advice sector will go in this country. It will move more into lifestyle planning,” said Brent.

“It won't be quick, but investments will become commoditised. You can go online and do your investments. You can go online and set up a pension. You can go online and get life insurance. You don’t need a financial adviser.

“But that’s a long time away. The value therein lies in the advice process and the planning. The service you’re offering clients outside the products.”

This country is full of business owners who I think are woefully under-advised.Dan Brent

Brent reckons those generations using DIY investment platforms are happy with what they are doing and do not necessarily want advisers to manage these funds. “Whereas people don’t wake up and say ‘I’m going to sort my financial planning out’," he said.

There is also a big market opportunity, according to Brent, for providing businesses with advice-only services which have little in the way of liquid cash. 

“This country is full of business owners who I think are woefully under-advised because they don't have money to invest. They invest a lot of money in the business itself, so they don't have pots of cash to invest till they sell a business - that's when IFAs start sniffing around.”

Currently, Brent reckons “most IFAs” don’t charge for financial planning. “That’s probably quite a bold statement. I think they use it as part of the process…But good financial planning should be a separate piece and chargeable.”

Some advice-only offerings charge hourly rates. Brent is currently mulling a project fee, which would cover the initial plan. And then those who want it can pay an ongoing advice fee.

“Instead of the fee coming from the pension, it’s a subscription fee which comes from their bank account,” said Brent. "This is where value is important. They need to think they’re paying for value.”

Increasingly, Brent is seeing more flat-fee, project fee and subscription fee advisers. But he has taken the majority of his inspiration from the US - namely Cody Garrett, a Texas-based advice-only financial planner.

“I’ve taken most of my inspiration from the US. The UK is about five-10 years behind the US [on advice-only planning],” said Brent.

Brent explained: “It’s the way the financial industry was set up - selling insurance, to then selling pensions and Isas. It’s never caught up beyond selling ‘something’.”

While Brent admitted there are some great financial planners in the UK, he said many are yet to take away that investment piece.

ruby.hinchliffe@ft.com