Why everyone needs financial advice – and what we can do about it | Truly Independent’s Katie Brinsden

In this, in her latest blog for IFA Magazine, Katie Brinsden (pictured), managing director at the national, directly- authorised IFA, Truly Independent,  delves into another one of those topics she feels so passionate about, and that’s the fact that everyone really does need financial advice. Here, Katie sets out why financial advice for all really matters and calls out to the industry to do what we can to shift the narrative to give us a fighting chance of closing the advice gap.

One of the most controversial ideas to emerge in recent years is that consumers can make their own financial decisions if they have the right information. The first question that springs to mind in light of this claim is exactly where such information should come from.

Since what they absorb could shape the rest of their lives, the hope ought to be that consumers will draw on notably robust sources. Purportedly, these might include  product literature, corporate websites and other freely available repositories of alleged acumen.

 
 

In reality, many people are more likely to seek insights from family, friends and even fellow pub-goers[1]. Barring auspicious exceptions, this route is highly unlikely to result in the imparting of truly reliable guidance.

Nonetheless, imagine for a moment that everyone adheres to the supposed ideal. They go online, find what they are looking for, studiously assemble a wealth of facts and figures and then they try to make sense of it all.

Would this put them in a suitably solid position to arrive at genuinely informed financial decisions? It is doubtful, to say the least. By way of illustration, consider a simple parallel.

 
 

I once worked in the motor trade, so I have more than a passing familiarity with cars. But does this mean I would rely on what I could dig up on the internet to fix, say, a broken suspension arm?

I could easily find a YouTube clip that tells me what to do. I might even unearth a discussion forum that debates the most effective tools and techniques. But would I have complete confidence afterwards?

Frankly, I would expect some sort of catastrophic failure to occur a few miles up the road. Why? The problem lies in the enormous chasm that separates acquiring knowledge from understanding how to use it.

 
 

Financial advice for all

Acquiring knowledge is eminently straightforward in our hyperconnected age. After all, we have pretty much all there is to know literally at our fingertips. But understanding how to use it is as challenging as ever.

And this is why I am a firm believer in financial advice for all – because financial advisers understand how the knowledge they have acquired should be used. Ours is a community of experts who are uniquely equipped to make a positive difference to other people’s lives.

 
 

In the final reckoning, astonishingly, the “informed financial decisions” spiel implies many consumers have no need of our skills. We must recognise and stress the very opposite is true.

Our own ideal is financial advice for all. Unfortunately, there are numerous major hurdles to realising this goal.

For example, many consumers are absolutely convinced they can get by without financial advice of any kind. Some have an extremely negative perception of our industry, often as a consequence of the unimpressive standards some so-called “advisers” exhibited several decades ago.

 
 

Many individuals regard financial advice as unnecessarily time-consuming. Others see it as costly or do not think it should be sold in the first place. A good number struggle to grasp how it might benefit them.

Masters of our own fate

So what does all this tell us? I feel the most important lesson is that the task of proving the case for financial advice for all falls to us and to us alone. We are the masters of our own fate.

 
 

Lower costs are perhaps an obvious starting point for shifting the prevailing narrative, but they are only one aspect of a much broader solution. Affordability has to go hand in hand with independence and approachability.

This means abandoning restricted advice models. It means maximising the scope for outreach and profile-raising. It means cultivating a strong work ethic. It means developing new competences and refining existing ones. Maybe above all, it means building and demonstrating credibility.

Ultimately, advisers have to portray themselves as what they actually are – impartial, experienced ambassadors of financial wellbeing who provide a genuinely essential service. That is something to be proud of – and something to promote.

 
 

We may not be able to change the minds of those who cling to the “informed financial decisions” school of thought. But we have every chance of changing the minds of millions of people who really do need what we can give them.

Katie Brinsden is Managing Director of Truly Independent.


[1] See, for example, Daily Telegraph: “Consumers turn to friends and family for financial advice”, June 26 2011 (https://www.telegraph.co.uk/finance/personalfinance/money-saving-tips/8600595/Consumers-turn-to-friends-and-family-for-financial-advice.html); and Peer2Peer Finance News: “Fifth of young people use social media for financial advice”, May 26 2021 (https://p2pfinancenews.co.uk/2021/05/26/fifth-of-young-people-use-social-media-for-financial-advice/).

 
 

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