The need for 360-degree advice is becoming ever greater, argues David Hesketh, group M&A manager at Perspective Financial Group Ltd
At the beginning of a new year it is impossible not to reflect on what has gone on in the 12 months before, whilst also speculating on what the new year will bring. 2011 was undoubtedly a roller-coaster ride for advisers themselves, their clients and the markets. This is often a strange industry to be involved in and just when you feel there is a degree of stability, the rug can often seem like it has been pulled away.
The global economy has taken an absolute battering and we have appeared close to the brink on a number of occasions. Even as I write this the future of the Euro-zone is still uncertain with many believing it is just a matter of time until Greece defaults rather than if. If this situation were to unfold we would be in further unknown territory and quite frankly, as they say, ‘all bets are off’.
Global issues of this kind are obviously of concern and clearly affect what advisers are able to do and the advice they issue, however, they are (for the most part) beyond our control and therefore I believe it’s better to focus on areas we can control. For IFA firms this has mostly been about securing their future and ensuring their own RDR-readiness come 2013. Important decisions are constantly being made in this regard and the nature of the IFA sector is changing forever because of them.
The landscape will clearly shift however the opportunities still remain, indeed a colleague of mine, Peter Craddock, has stated his belief that we are on the brink of a ‘golden age’ for advice. The reasons for this are many and varied.
Perspective recently attended the Personal Finance Society (PFS) Annual Conference which opened with a video detailing the yin and yang of financial services at present. The video began with a series of ‘lowlights’ of the year including ‘US credit rating cut’, ‘FTSE falls through 5,000 mark’ etc, alongside other facts including ‘Over half of all people in the UK have no insurance’. It then went on to highlight the positives for the advice profession and some of the core underlying reasons why demand for advice is likely to increase, notably ‘17% of people will live to 100’, ‘Children born today are likely to have £100,000 of University costs’ and ‘1 in 4 will need long-term care’.
We should also not forget that we are entering a period when the state is less inclined and less likely to be a safety net for many millions of people. The onus will be on the individual to put in place their own safety net that covers all parts of their life, particularly as they move close to retirement age. With the abolition of a fixed retirement age the government is not just recognising that we are living longer but that it can no longer support the retired for such lengthy periods as it has done in the past. UK society is therefore undergoing a major shift from state reliance to individual responsibility and the need therefore for quality and professional financial advice grows ever more.
I appreciate that many mortgage brokers and intermediaries read BestAdvice however one suspects that you are not surviving by just writing mortgage business indeed the likelihood is that you are offering protection, general insurance and all manner of other products. It would also be safe to say that many mortgage firms will have structured relationships with local IFA practices in order to cover off the range of products they are not able to advise on. This type of relationship is vitally important and if your firm does not have something in place then, given what is coming over the horizon, it should certainly consider its options in this area.
Holistic financial planning is an oft-used phrase however, as we march into the future, the need for 360-degree advice becomes ever greater. Advisers either need to ensure they can deliver all the necessary advice in all areas, or if they can’t, they need to have relationships in place which allow them to do this. Given that a significant number of IFA firms may not make it past 2013 then having such a relationship with a national group may be the most worthwhile one to have in place.
2011 was clearly a tumultuous year and 2012 will also present some considerable challenges, however the long-term future for advice does not just look assured but veritably rosy. The need for advice has never been greater and demand for quality advice is unlikely to fall back anytime soon. Advisers therefore need to ensure they are ready and prepared in a regulatory sense, but also have the right support in place to deliver across the widest range of areas.