Part of our series of articles celebrating IFA Magazine’s ten year anniversary, David McKendrick, partner and Chartered Financial Planner at independent wealth management and financial planning firm Equilibrium, outlines some of the key changes in the advice profession over the past decade. And why he feels that, in future, it could be a case of survival of the fittest for the profession.
- What does Equilbrium consider to be the biggest change to the advice profession since 2011?
Whilst there have been a few large-scale changes such as the Retail Distribution Review raising standards and trying to provide greater clarity for clients and the more recent SMCR regulation change place more emphasis on the individual firms, I’m not sure they have truly changed the landscape of the advice sector.
Over this period, the use of centralised investment propositions has become the norm which, in turn, should improve the consistency of outcomes for clients. It was already something that we had embraced with the need for quick movement in 2007/8.
The biggest shift, really, has been the perception of value – it’s far sharper than it was from a client and firm perspective. ETFs are core propositions for many and low-cost provision of products to the masses has developed, but how do they meet a clients need? Cheaper isn’t always best, but you shouldn’t pay for what doesn’t add value.
- How have things changed for Equilibrium?
The biggest change at Equilibrium in this time period was the move from model portfolios to the evolution of our own funds via the structures provided by IFSL. This has enabled real-time trading, access to a broader range of investments and, in turn, providing time efficiencies to allow the client manager team to use their wealth of knowledge to assist the advice and service offered.
We have also embraced technology more than ever, like most I would suspect. The introduction of our client portal pre-pandemic was a very useful service to clients however it has been invaluable since. Speedy and efficient reporting and communication in a highly secure fashion is now the norm and helping in our quest to be more environmentally aware.
Virtual communication with clients has been a revolution. Across multiple industries this has been enforced of late due to the world that we have all been living in, and it has created many opportunities, including the ability to market to a wider audience at a lower cost and our live online events on economic updates, investment markets and financial planning. This has benefited our clients, but also the acquisition of new ones, from a wider geographical area.
- What further changes to the advice profession do you expect to see in future?
Changes coming in the future will involve more regulation and the continued move towards larger firms. I think that Chartered status will be a hygiene factor rather than a gold standard with a continuing move to the financial coach role. This will be the differentiating factor between firms, either they will work on a low-cost volume approach with more automated, decision tree style framework or the hands-on bespoke value approach.
I believe that clients will still want to deal with people, but there will be more that will be happy with the online low-cost version. In both arenas it will be survival of the fittest.
