Are independent financial advisers doomed?
Are independent financial advisers doomed? That's the question asked by Lord Newby, the Liberal Democrat Treasury Spokesman in the UK - and as we've been following a similar regulatory track, we should consider: is that where we are going?
Thursday, September 23rd 2010, 11:00AM
by Jenha White
Now the UK proceeding down a specific regulatory track for a while, we are broadly following a similar approach, but it is different enough to say that if we stick with what we've got, we won't get anywhere near even asking the question that forms the headline - let alone answering it in the affirmative.
But it's worth pondering, firstly because we should be concerned that we learn from the UK experience rather than replicating it, that's the only advantage of being a follower.
Secondly, because it has always fashionable to question whether advisers have a future, and it's nearly always rubbish.
The commentator rumbles through the arguments: will the IFA be gradually be squeezed out; between low cost self-service / low service models at the bottom end, and effective offers to premium clients at the top, and rising costs and regulation hitting what's left in the middle?
No. The segment will have ups and downs, but I think the sector will always be attractive.
You see, what they leave out is the service dimension. Clients are nearly always happy to pay more for service - like the fact that their financial adviser has been the same person, in the same line of work for over 15 years on average.
That's vanishingly unusual in those low cost channels run by the banks - and it's even rare in the private banking outfits. Even if advice from an AFA costs more, many clients will choose to pay that price, because they like the fact that you'll come back next year, and the year after, because it's your business.
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
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