This is a guest post by Ben Rees of Elite Paraplanning.
The recent lively debate surrounding the launch of the controversial Money Advice Service (MAS) has sparked an interesting question: will it help or hinder IFAs?
The MAS Chairman Gerard Lemos has gone on record saying that the service will drive demand for advisers and their services, but many advisers are clearly skeptical. Blogs abound with disgruntled advisers commenting on the supposedly “free” advice service, paid for by a statutory industry levy.
There may well exist a group of consumers who do find themselves unable to afford ‘post-RDR’ advice from an Independent Financial Adviser, and the MAS might prove to be a welcome alternative to seeking advice from a bank. However, I believe that the recently felt concerns of the broader IFA community about the service are not only valid, but also thought provoking.
The MAS Chief Executive Tony Hobman recently stated “we are never going to recommend a specific product to someone because we are giving unregulated advice.” He goes on to say that “we will talk generically about types of advice…but not in a way that recommends one specific product.” So, it would seem, the MAS is not going to be offering any advice at all. Nothing for IFAs to worry about then, after all? Maybe.
It would seem that the launch of the MAS has sharpened many advisers’ focus on ensuring that their clients understand and appreciate the advice that they are paying for. Whether the MAS is providing ‘free advice’ or not, IFAs undoubtedly still face an uphill struggle to convince some potential (ands existing) consumers that advice is not, and should not, be free. In the post-RDR world how advisers get paid, and for what, will suddenly be in very sharp focus. Many adviser firms we speak to have embraced the ‘New Model’ advice proposition and are flourishing, but many have not. Proving your worth to your clients is going to become key to a successful and profitable business in the future.
So, how can advisers do this? One way is to look at your business and determine which areas can be streamlined. Maximising time with existing clients, gaining referrals, and cultivating new relationships is likely to be top priority for most. Minimising time spent on report writing, research and desk-based activity is likely to be the sole method of making this a reality. By outsourcing your report writing and research, you free up time to spend with clients, at the sharp end of the advice process. For a fixed fee, you can outsource this time consuming but vital part of the advice process to professional paraplanners, removing the cost of employing someone in-house. Our research shows that the cost of outsourcing your research and report writing usually equates to, on average, 10-30% of the initial adviser fee charged by advisers on pension and investment cases. If this saves you 5 or 6 hours of work, how many clients can you see in that time, each week? How profitable can your business become? And how much more will your clients value your service?