Some people just don’t need financial advice. And you can trust us when we say that – we’re Financial Advisers. Basically, the more intricate elements of our service (like complex Tax Planning) just aren’t necessary for some people’s circumstances. The true value of what we do doesn’t really become truly obvious until we can either make you a lot of money (which is never set in stone, because we rely on the markets to get you there) or, save you a lot of money (through Tax Planning). See, if straight off the bat we can stop your family losing tens/hundreds of thousands of pounds, and we charge, say, £3,000 for that service – it should be a no-brainer.
Let’s imagine you’re in the bracket of people who definitely need some serious advice. Then imagine you go looking for help but can’t find any. Seems like that would be the worst case scenario, right? But it’s not. It’s actually becoming a very real concern. And that was even before the coronavirus pandemic!
An article published by FT Adviser in April 2020 stated that within the first two months of the year alone, 66 Independent Financial Advice (IFA) firms de-authorised. Some think that’s because of stricter regulations; others believe it’s due to sky rocketing costs, such as Professional Indemnity cover. Regardless of the cause, it’s apparent that it can only get worse. More and more people need advice, with advisers are leaving the profession in droves. And there are very few new IFAs coming into the market.
So forget about the businesses and their struggles for a moment, what might this mean to the retail customer? Well, a few things. Firstly, the firms shutting up shop will either have to give their clients to a stronger firm who they think can weather the storm. Or simply leave clients to their own devices – what we call ‘orphaning’ clients.
Those without a financial adviser will probably struggle to find a local IFA (with numbers dwindling). Even if they do manage to find an adviser to take them on, they probably won’t have the accreditations you’re encouraged to look for; like Chartered Status, British Kite Mark and the Pension Transfer Gold Standard.
Here at PenLife we’ve just successfully renewed our Professional Indemnity Insurance on acceptable terms (so that’s great news!). We’ve structured our company to survive the harshest of regulative, legislative or economic conditions. As with the Global Financial Crisis of 2008/09, the pandemic crisis has prompted us to take the necessary steps to become an even stronger, more secure business. We feel really lucky, because we know many other businesses are not in such good shape.
So in short, what should you take away from this update?
- If you’re already a client of ours – you’re alright Jack!
- If you’re someone else’s client, you’d be well advised to review the stability of the company looking after your finances right now
- If you aren’t being looked after by anyone, but know you can’t do this on your own – seek out a Chartered Independent Adviser to help you (and the more additional accreditations they have, the better!)