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A Little Knowledge

Might be better than none at all, says a lightly-bruised Richard Harvey


 

booksOne of the perhaps unintended consequences of RDR is that investors have been reminded that they can have more involvement in how their savings are managed – and that now is the time to forge a much closer relationship with their IFA.

The changes to the investment climate and pension regulations mean that many investors, who have previously been quite happy for their IFA to make all the decisions, are now pondering the switch from discretionary to advisory services.

Vanilla Flake

A few years ago, when the world’s economy was falling off a cliff, my previous IFA scornfully dismissed a plea to be very, very careful with my meagre savings, and commented that, while my risk profile may have been cautious, he didn’t like “vanilla investments”.

To be fair, he didn’t take my money out of a safe haven and stuff it into North Korean government bonds. But I did need to know (and should have been better informed) about exactly what a “cautious” profile meant – as opposed to “progressive”, “adventurous” and “rather you than me, chum”.

If you are an adviser who has recently made a duff investment decision on behalf of a client, you may be dreading the next review meeting – indeed, you may be girding your loins with armour-plated undercrackers.

The Other Pensions Opportunity

Once you’ve explained yourself (“…but of course, we had no idea that the president of Middle Eastern Spondulix was planning to run off with his mistress and all the funds”), there is a real opportunity to repair the relationship by reminding the client of the upcoming changes to private pension arrangements.

Many investors simply don’t understand the new rules, and are going to need sound advice to ensure that, in due course, they don’t end up clutching at the turn-ups of the local social services bod, pleading for a free place in a care home.

Furthermore, it’s reckoned that some 40 percent of soon-to-be pensioners are proposing to splash at least some of their cash, with “travelling” top of the list of retirement ambitions. Wonder if they’ve seen the price of diesel recently.

So it’s your opportunity to re-position yourself with clients as the fount of all financial wisdom. An indispensable Solomon the Wise.

Service Sells

Apropos of that, in July’s IFA Magazine, Ian Price, divisional director for pensions at St James’s Place, made some pertinent comments about how motor retailers have dramatically improved their client relationships in recent years. And he reflected that “we all need to take time out to reflect on whether we have the right service strategy in place for our clients.”

It’s not just car dealers. Anyone who works in the service industry has had to up their game during the financial crisis, and improve the way they engage with their customers.

So maybe the investment revolution, from RDR to pension de-regulation, is the great opportunity for IFAs to evaluate their own client contact skills?

Particularly if they wish that they had gone with the “vanilla” option, rather than trust that Middle Eastern guy, wherever he, his mega-yacht and his lubricious lady might be.

 

 

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