I read with interest the article published recently in the Financial Times that talked about the demise of the traditional financial adviser and how members of the public now look more and more to the internet as a means of accessing financial advice and in order to source financial products.According to the survey undertaken by ComPeer, the wealth management analyst, of the 2000 people surveyed, almost 50% have no financial adviser. Reasons for this include the apparent ease at which individuals can now do their own product research on line, the continued mistrust of financial advisers generally and their motives, and finally their perceived inability to add value.
I find this article both worrying and exciting all at the same time. Worrying on the basis that individuals may be basing some of their biggest financial decisions on information ( whether accurate or inaccurate ) that they find on the internet and exciting on the basis that people are now starting to realise that they don’t need to buy expensive financial products from an adviser, when they can do their own research and source a cheaper solution. This leads to opportunities for us as Financial Planners.
Here are Critchleys FPLLP, we have always stressed that the financial product is secondary to the advice process and it should not be the key determinate that plans your financial future. Many financial planning issues can be solved without the need to buy a product at all and therefore working with an adviser whose remuneration is not based on selling products, helps to counter any possible concerns about ‘trust and motivation.’
Internet based services by their very nature are very transactional based and are great for people who seek advice on event driven issues that occur in their lives. For example, they reach retirement and need to by an annuity or they receive an inheritance and need to buy an ISA. Financial planning is different. A good planner should act as a sounding board and be able to use his/ her questioning skills to help you appreciate what is important about money to you and then help define your personal goals, working with you to achieve them over time. He should take a “big picture” view of your financial situation and make strategic recommendations that are right for you. This approach should look at ALL of your needs including budgeting and saving, taxes, investments, Estate and retirement planning as any one decision relating to one area of your finances is likely to impact on another without you knowing. Without a specialist overseeing the whole situation you could end up making wrong decisions which, over time could have a knock on effect leading to serious consequences.
Whilst the internet has changed the way we live our lives and is a fantastic resource, can it really provide a dependable level of personal financial support? I am not so sure. I am after all influenced by the adage that ‘a little knowledge can be dangerous.’ And that being the case, when it comes to financial arrangements, chances are that by the time you find out whether you have taken the wrong advice - it could well be too late to turn things around.