Potential Financial Adviser Job, Ethical concerns - urgent opinions much appreciated!

Stroot1

Agarnett, well that’s a lottt of questions and a push towards some soul searching right there haha.
I did fall in to financial services to some extent with my first role after uni as a trainee paraplanner but I did think it seemed a good fit in that I’ve always been interested in money and I like to help people with issues of whatever kind. I didn’t aim to be a trainee adviser as such but I feel it may be a good opportunity, do you feel as if someone could be pushing themselves/striving higher if they went for banking/accountancy and that maybe I should step back and work out what I “want” more etc? Some of my peers are in those sectors however I do like the sound of a financial advisers role in comparison to a lot of banking/accountancy roles and the fact I’d be offering a range of products/advice from which clients will hopefully find value. In terms of “not trainee adviser I expect” when you were referring to my peers, not some of the high flyers but does that mean to say I am wrong to be interested in it? I’m not sure what you’re getting at here.
The IFS exams to level 4 qualified adviser would be completed in the first year and I would complete sales training by the company as well as shadowing a single sole trader adviser in his office. I do think it will still be challenging, I do believe I am bright but maybe not the “brightest” and my uni studies and taking some time off since has been affected by on and off depression so maybe that has put me off from some of the really high intensity cut throat jobs. I would have sales targets and do think I’d be a decent seller due to good communication skills and a commitment to finding out their requirements, it does contradict a bit with my whole wanting to provide a value for money service that there are sales targets but I do think I can still offer good deals/advice to clients from a multi tied base that suit their needs.
I do think the offers good in that it’s local, 20k basic, training and travelling to clients cost etc. covered. It is for a reputable firm in the top 5 of the Financial Times top financial advisers and I would be working for a sole trader adviser who has too big a client base to handle so he needs more help. The fact no other trainee advisers are there does seem like I’d learn a lot by shadowing him and I am meant to be selling within a few months. In terms of looking round at all the options I know I don’t have all bases covered as I’ve had a bit of a tendency to put off looking at everything, I think I just have a big fear of making a wrong decision and getting in to a wrong job and yet as a result I limit my search and don’t really give myself options as I know my depression and anxiety is bad with more and more analysis. Actually being in a job I know I have a fear that the illness will be worse so that’s probably partly why I’m talking myself out of this to some extent. Thanks for the kind wishes, I do feel I have genuine concerns with regards to the whole marginalization thing so it would be good to hear your views on that and if concentrating wealth through advice causes more trust fund babies etc. with unearned wealth used inefficiently as opposed to wealth being spread better for the common good. Cheers.

coyrls

scholes22 wrote: »

if concentrating wealth through advice causes more trust fund babies

You must be anticipating delivering some potent advice if it's going to result in more babies.

Oh and if the company in question is St James's Place then yes, you should have worries about ethics.

princeofpounds

This may be on the realms of highly illogical, so if I am going off on one let me know, it's making sense in my head but might be an overly obsessive train of thought.

Yes. It is an overly obsessive train of thought.


It's very doubtful you, I, or anyone else can really comprehend the complexities of how wealth flows in an economy and the effect of a small detail like mortgage advice on it.


But a more efficient economy with better allocation of capital is good, at some level, for all of us. That is clear.


If you want to give poor people financial advice go and volunteer at CAB or a debt charity. If you spend 80% of your time doing that and 20% at the day job (for fairness and balance) then you'll quickly realise how sustainable that simple concept fairness and balance of is when you can't pay your own food bill.

kangoora

I find it hard to believe this person isn't trolling.

Just in case, get over yourself. I've never seen such a bunch of ego-driven questions in my life. Whether you take the job or not won't make one jot of difference to the income redistribution and the poor or wealthy in society. If you don't take the job it simply means that someone else will.

Either take the job, swallow your conscience if you feel you have to and devote your spare time and excess cash to good deeds at some point to salve your conscience. Or don't take the job and go and work driving a van for a charity shop, secure in the knowledge you are doing good.

Snakey

It sounds as if you have very strong views and that this is entirely the wrong career path for someone with your politics. I'm not sure why you're not sure. Next week's dilemma: I'm a strict vegetarian, should I go and work as a taster in a steak factory?

You have to work out what your priorities are, and act accordingly. Can't bear the thought of doing anything to help the top 20% of people? Find something which allows you to work with the bottom 20%. Of course, you can't then expect to bring in a top salary as nobody will be willing or able to pay top fees for your services. It's possible that you may have to consider a trade-off between saving the world and paying the rent.

TH1878

Gary, the sooner you stop thinking of advice as selling products, the more fulfilling and rewarding the career will be.

A good adviser / planner's job is to ensure that your clients can afford to live the life they want to, both now and in the future. Whatever happens.

Products are just tools in the bag and are the least important part of what we do.

If it's St James's Place you're on about, they're an absolute rip off but I believe they do have a link up with Voyant (cashflow modelling software). I suggest you get to know this system inside out and learn how to use it with clients. Read read read as well - start with The Number by Lee Eisenberg and a new book (not yet released) called the One Page Financial Plan by Carl Richards (I've got an advanced copy and highly recommend.)

Exams - go past level 4 and take the Certified Financial Planner (CFP) course with the Institute of Financial Planning.

You're right at the start of an exciting time for the profession but you need to ignore the noise created by people whose views were formed 3 decades previously when the world was a very different place.

Stroot1

Thanks for the useful replies, to Kangoora that came across really rude to me and I can assure you I'm not trolling. I genuinely obsess about things and am simply worried about the overall effects.

Aegis

TH1878 wrote: »

Exams - go past level 4 and take the Certified Financial Planner (CFP) course with the Institute of Financial Planning.

Personally I went down this route and hated it. I never even bothered submitting for a third time because the second time I was failed on a set of pointless technicalities. My report writing is different to the IFP's standard, but my clients love it and understand what I'm recommending they do and why.

The most infuriating thing though is looking at some reports which passed 5 to 10 years ago and seeing how flawed they are. They've obviously upped their standards considerably, but it's ultimately not a test about financial planning but report presentation in their style.

I have benefited so much more from Chartered status than the learning I did as part of my time studying for CFP. Once I hit Fellowship I'm probably going to go down the route of STEP exams, as those are relevant to the type of private client work I do.

Stroot1

Hi Aegis, PrinceofPounds, TH1878 and dunstonh. Thanks very much for your advice on the forum. I've got a further meeting with the adviser tomorrow where I could be signing a contract thus probably my obsessions jumping about even more than usual, sorry for that. I think one thing that seems logical to me is that maybe more wealthy clients passing money on to heirs as inherited wealth is often used inefficiently (backed up by vast majority of economists) and causes inequality purely by the lottery of whose kids whose. And helping people to mitigate their tax would surely mean more going towards inherited wealth as opposed to the government who would presumably spend it more efficiently. Do you have any views on that?

Secondly as dunstonh says, I would have to accept "knowingly advising people that you are not giving best advice. Either in quality of product or pricing of product." Obviously this interferes with princes's point about better allocation of capital. My job would be with Openwork, do you still think I could offer an efficient (but not as efficient service as IFA) with them and given it would be better allocated than say people going direct to banks, it would probably still increase efficiency overall given people won't be using single tie products if they go through Openwork? Of course the opportunity cost is missing out on a seemingly more efficient IFA though I was lead to believe there are some advantages of multi tie in that some providers can actually offer their products at lower price points through contracts with openwork etc. plus an up front fee isn't necessary and maybe if someone wants a specific product they can do it more efficiently with Openwork due to the platform dealing with less providers. Your views on whether these advantages are actually apparent, and more so whether you think working for a multi tie would still be efficient in that I'd be offering good advice compared with tied advisers/no advice, would be great.

bowlhead99

scholes22 wrote: »

I think one thing that seems logical to me is that maybe more wealthy clients passing money on to heirs as inherited wealth is often used inefficiently (backed up by vast majority of economists) and causes inequality purely by the lottery of whose kids whose. And helping people to mitigate their tax would surely mean more going towards inherited wealth as opposed to the government who would presumably spend it more efficiently. Do you have any views on that?

The government recognises that it is not necessarily great for society if people can just hoard cash and pass it on to their kids to hoard too. So, they have a tax on inheritance. They set it at some level which results in a tax take which they feel distributes the cash 'about the right amount'.

Governments are voted in by a population who will have some views on that - and may prefer to vote for a party with capitalist 'small government' ideals who will allow a $5.3 million estate to be inherited without paying inheritance tax (e.g US) and 40% thereafter... , or a party who allows only £325k per person (£650k for a couple) before charging 40% thereafter (e.g. UK), or a more socialist party that charges some tax even on a £50k inheritance between husband and wife, albeit at a relatively lower rate (e.g. Spain) etc.

In setting the rates, they are well aware that some people will be incentivised to use the absolute maximum of the allowance and structure their affairs to avoid tax where legally possible. They have limits and rules on what you can give away in the years before you pass on without it being brought back into the scope of IHT, and they have maximum amounts that you can be left with on death which, at £600k+ per couple, will ensure that the poorest people don't pay it and the richest people will ideally pay the most. They do know that people will want to 'make the most' of allowances and opportunities open to them, and they will broadly consider those when setting tax rates and allowances.

What the government does in allowing certain allowances and breaks is similar to the way a bank will let you get 5% interest from a current account if you meet the exacting standards and optimise your position. They know some 'customers' will push the rules to the limit and not be as 'profitable'. The banks know it is better to have people be customers that feel they get a good deal, instead of move elsewhere. The governments know they may get more people generating wealth in London rather than Paris if they have lower wealth taxes and income taxes and inheritance taxes.

Actually as an aside, if you look at someone dying with a £2m property and passing it to two adult kids, in the US they would pay zero tax; in UK the estate would be taxed 33% if unmarried or 27% for a couple with two nil rate bands; in France it is closer to 23% and Spain more like 20%. My maths might be out due to FX rate changes in the last year or so. But basically we do levy high inheritance taxes compared to the rest of Europe and the rest of the world, and it is not surprising that people seek methods of structuring their affairs with pensions and wrappers and gifts and so on to avoid paying taxes that are not strictly necessary.

Sure, you can make use of lifetime gift allowances by giving up full control of your assets earlier, and if you can afford the advice you might end up setting a discretionary trust that pays tax which might be at a lower rate than the income tax that you would have paid if you had kept the assets yourself. There will always be high net worth people that can buy advice to help them minimise their tax bill. It is worth it to the high rate taxpayers, when proceeding unadvised they might pay high rate tax on a million of income. But the government know that high rate taxpayers are going to be doing this, and that's why they set the higher bands at 40 or 45% rather than perhaps 30 or 35%. They aim for a position which is competitive in relation to other countries without making the rates too low and having a lower wealth redistribution.

I thought the graphs from princeofpounds illustrate quite well how the top earners pay most of the taxes, even if top earnings does not quite translate to top wealth (I have a 'top x%' salary but only 'modest' wealth compared to people who've been around 20-30 more years or made wiser investment choices). If you have a conscientious objection to helping the rich get richer - or helping them to preserve more wealth for their offspring and family and friends and charities rather than putting it into the national kitty - then financial advisory work is probably not for you.

You could relocate to a country which is less capitalist and has a larger tax take, but you would still find that people want assistance with making themselves richer or keeping money in their hands rather than putting it in the national kitty. The issue you have is that the only ones that will come to you for advice are the ones that can afford to pay you, which will not be the poorer people, because they are not paying much taxes and do not have much wealth to benefit from professional management.

If this bothers you and you are a communist at heart rather than a capitalist, you should probably consider working for a charitable organisation that helps people with their financial situation or debts rather than get a more highly paid job where you help people on middle or high incomes optimise their assets. We all have a 'moral compass'.

I am quite happy to take a higher salary, and aim to minimise tax on it, and also benefit from taking the risks of investing it in businesses providing employment to others, while giving some away to charities that inspire me... rather than just take a menial salary, put money in savings accounts and hope that the banks make sensible loans with it and that what I pay over to the government is all deployed effectively.