Why is the cost of advice so high?

Thrugelmir

BritishInvestor said:

dunstonh said:

While Unbiased is not ideal, the typical adviser profile on there is pretty average, tending to talk about:
1. Themselves (zzzz)
2. Investments (zzzz)

How on earth can you differentiate based on these profiles?

The unpaid profiles give you virtually no choice.  The paid profiles have more customisation possible.

The FCA treat directory listings as a financial promotion.  So, all the regulatory text needs to be present and wording needs to be compliant.

If they instead focused on exactly the type of people they help (e.g those planning to retire in the next 5 years), I reckon they'd get a lot more traction and people getting in touch directly. 

A general practitioner IFA will help everybody.  Wealth manger FA/IFAs will often be focused on larger investors.   Some business models may focus on a type but most do not.

I just did a unbiased search using our postcode.   We didnt come up at all and I cant see a place to show the non paying adviser firms.   The first and second advisers were not actually based locally.  Both were national firms that pay to appear at or near the top in every search and have travelling advisers.   The third says "new adviser" but it isnt.  His firm has been going for over two decades.  What it really means is that he is not buying leads from unbiased.  Then there were two regional firms.  After that, the distance was far away and plenty of FAs (not IFAs) appeared on the list.   

Apart from one firm, the rest were mostly salesforces.   Only one of the general practitioner local IFA firms appeared and he isn't buying their leads.    None of the rest of the local independent IFA firms appeared. (by independent IFA, I mean not a salesforce or appointed rep of a network but independently owned IFA firms)

Twenty years ago, the list would not have had the salesforces and every IFA would have been on there.

If you look over in the States (they are way ahead of us) there appears to be far more of a focus on niches/specialisms

When it comes to transacting business the US is so very different. The much quoted proponent of SWR in the US charges their clients a minimum of 1% of portfolio value. Nothing comes for free in this world. 

dunstonh

If you look over in the States (they are way ahead of us) there appears to be far more of a focus on niches/specialisms

I actually think they are behind us.  Their different classifications make it more complicated.  its less regulated.

"A general practitioner IFA will help everybody.  "
But if you want specialist advice (for example around retirement planning), would you want to work with a specialist or a generalist?

Why do you think a general practitioner firm will not be able to give specialist advice?   Most advice firms have multiple advisers that cater for different areas.   25 years ago, most IFAs (individuals) did mortgages.  Nowadays most IFAs (individuals) don't do mortgages.  The IFA (firm) does but uses mortgage advisers.  Insurance is often the same.   Equity release and DB transfers tend to be individuals within the firm but not all of them.  The days of jack of trades, master of none have mostly gone.

Something like 98% of consumers don't need specialist advice.  Retirement planning is not going to be specialist for the majority (and I say that as someone who has further qualifications above the standard in those areas)

"Twenty years ago, the list would not have had the salesforces and every IFA would have been on there."
I'm not sure what the solution is TBH. Unbiased have to make money, and I'm assuming cost per click/SEO competition is ever increasing. They therefore want as many advisers paying for leads to cover their costs. Adviserbook doesn't seem to have gone anywhere.

I am not sure what the solution is either as the directories are commercial entities and have to make money to exist.    An industry body would be a good way but IFAs have been very ineffective when it comes to having an industry body.  Unbiased used to be the best way but it went very commercial.   And that very often happens.  Look at how networks started and where they are now.

 As it stands, unbiased is not a good consumer option as it effectively points people towards the salesforces and networks and turns the consumer into a lead for a company that wants to buy leads.   Most advice firms dont need to buy leads.   Salesforces tend to have the least qualified and experienced staff.      Networks are not what they used to be as they now have to force all their members to work the same way and their systems and controls are set to the lowest common denominator.

wjr4

BritishInvestor said:

dunstonh said:

While Unbiased is not ideal, the typical adviser profile on there is pretty average, tending to talk about:
1. Themselves (zzzz)
2. Investments (zzzz)

How on earth can you differentiate based on these profiles?

The unpaid profiles give you virtually no choice.  The paid profiles have more customisation possible.

The FCA treat directory listings as a financial promotion.  So, all the regulatory text needs to be present and wording needs to be compliant.

If they instead focused on exactly the type of people they help (e.g those planning to retire in the next 5 years), I reckon they'd get a lot more traction and people getting in touch directly. 

A general practitioner IFA will help everybody.  Wealth manger FA/IFAs will often be focused on larger investors.   Some business models may focus on a type but most do not.

I just did a unbiased search using our postcode.   We didnt come up at all and I cant see a place to show the non paying adviser firms.   The first and second advisers were not actually based locally.  Both were national firms that pay to appear at or near the top in every search and have travelling advisers.   The third says "new adviser" but it isnt.  His firm has been going for over two decades.  What it really means is that he is not buying leads from unbiased.  Then there were two regional firms.  After that, the distance was far away and plenty of FAs (not IFAs) appeared on the list.   

Apart from one firm, the rest were mostly salesforces.   Only one of the general practitioner local IFA firms appeared and he isn't buying their leads.    None of the rest of the local independent IFA firms appeared. (by independent IFA, I mean not a salesforce or appointed rep of a network but independently owned IFA firms)

Twenty years ago, the list would not have had the salesforces and every IFA would have been on there.

"A general practitioner IFA will help everybody.  "

But if you want specialist advice (for example around retirement planning), would you want to work with a specialist or a generalist?

Retirement planning is not specialist advice at all. Specialist advice would be complicated tax and trust issues, pensions and divorce, long term care planning. Most other needs are covered by any financial adviser. 

LV_426

wjr4 said:

Retirement planning is not specialist advice at all. Specialist advice would be complicated tax and trust issues, pensions and divorce, long term care planning. Most other needs are covered by any financial adviser. 

I agree. The questions I'm asking are fairly simple, my finances are unique to me, but not that complex. Any IFA doing pensions advice will have seen it all before.

BritishInvestor

wjr4 said:

BritishInvestor said:

dunstonh said:

While Unbiased is not ideal, the typical adviser profile on there is pretty average, tending to talk about:
1. Themselves (zzzz)
2. Investments (zzzz)

How on earth can you differentiate based on these profiles?

The unpaid profiles give you virtually no choice.  The paid profiles have more customisation possible.

The FCA treat directory listings as a financial promotion.  So, all the regulatory text needs to be present and wording needs to be compliant.

If they instead focused on exactly the type of people they help (e.g those planning to retire in the next 5 years), I reckon they'd get a lot more traction and people getting in touch directly. 

A general practitioner IFA will help everybody.  Wealth manger FA/IFAs will often be focused on larger investors.   Some business models may focus on a type but most do not.

I just did a unbiased search using our postcode.   We didnt come up at all and I cant see a place to show the non paying adviser firms.   The first and second advisers were not actually based locally.  Both were national firms that pay to appear at or near the top in every search and have travelling advisers.   The third says "new adviser" but it isnt.  His firm has been going for over two decades.  What it really means is that he is not buying leads from unbiased.  Then there were two regional firms.  After that, the distance was far away and plenty of FAs (not IFAs) appeared on the list.   

Apart from one firm, the rest were mostly salesforces.   Only one of the general practitioner local IFA firms appeared and he isn't buying their leads.    None of the rest of the local independent IFA firms appeared. (by independent IFA, I mean not a salesforce or appointed rep of a network but independently owned IFA firms)

Twenty years ago, the list would not have had the salesforces and every IFA would have been on there.

"A general practitioner IFA will help everybody.  "

But if you want specialist advice (for example around retirement planning), would you want to work with a specialist or a generalist?

Retirement planning is not specialist advice at all. Specialist advice would be complicated tax and trust issues, pensions and divorce, long term care planning. Most other needs are covered by any financial adviser. 

Hmm, we'll agree to disagree on that one. 

Given the uncertainty that someone at retirement faces, with unknowns around longevity, returns and inflation, there's a fair amount of investment in time and tools to give someone the confidence that they can afford to finish work.

You only have to look at the discussions on here to see how much people (understandably) struggle with the topic. In the IFA world, you often hear of retirement planning strategies that have no evidence to back them up - happy to give many examples.

I would argue your example are much more "black and white" (but agree they are specialist). 

BritishInvestor

Thrugelmir said:

BritishInvestor said:

dunstonh said:

While Unbiased is not ideal, the typical adviser profile on there is pretty average, tending to talk about:
1. Themselves (zzzz)
2. Investments (zzzz)

How on earth can you differentiate based on these profiles?

The unpaid profiles give you virtually no choice.  The paid profiles have more customisation possible.

The FCA treat directory listings as a financial promotion.  So, all the regulatory text needs to be present and wording needs to be compliant.

If they instead focused on exactly the type of people they help (e.g those planning to retire in the next 5 years), I reckon they'd get a lot more traction and people getting in touch directly. 

A general practitioner IFA will help everybody.  Wealth manger FA/IFAs will often be focused on larger investors.   Some business models may focus on a type but most do not.

I just did a unbiased search using our postcode.   We didnt come up at all and I cant see a place to show the non paying adviser firms.   The first and second advisers were not actually based locally.  Both were national firms that pay to appear at or near the top in every search and have travelling advisers.   The third says "new adviser" but it isnt.  His firm has been going for over two decades.  What it really means is that he is not buying leads from unbiased.  Then there were two regional firms.  After that, the distance was far away and plenty of FAs (not IFAs) appeared on the list.   

Apart from one firm, the rest were mostly salesforces.   Only one of the general practitioner local IFA firms appeared and he isn't buying their leads.    None of the rest of the local independent IFA firms appeared. (by independent IFA, I mean not a salesforce or appointed rep of a network but independently owned IFA firms)

Twenty years ago, the list would not have had the salesforces and every IFA would have been on there.

If you look over in the States (they are way ahead of us) there appears to be far more of a focus on niches/specialisms

When it comes to transacting business the US is so very different. The much quoted proponent of SWR in the US charges their clients a minimum of 1% of portfolio value. Nothing comes for free in this world. 

"The much quoted proponent of SWR in the US charges their clients a minimum of 1% of portfolio value"

As do many in the UK, but I would agree fees tend to be higher across the pond. 

There aren't that many over here following the processes discussed in books such as this

https://www.amazon.co.uk/Delivering-Massive-Value-Profitable-Hyper-Efficient-ebook/dp/B09F3Y7FGF/ref=sr_1_1?keywords=matthew+jarvis&qid=1638888468&sr=8-1

(but it could well be the case that there is a huge number of US advisers that also aren't following his methods).

BritishInvestor

dunstonh said:

If you look over in the States (they are way ahead of us) there appears to be far more of a focus on niches/specialisms

I actually think they are behind us.  Their different classifications make it more complicated.  its less regulated.

"A general practitioner IFA will help everybody.  "
But if you want specialist advice (for example around retirement planning), would you want to work with a specialist or a generalist?

Why do you think a general practitioner firm will not be able to give specialist advice?   Most advice firms have multiple advisers that cater for different areas.   25 years ago, most IFAs (individuals) did mortgages.  Nowadays most IFAs (individuals) don't do mortgages.  The IFA (firm) does but uses mortgage advisers.  Insurance is often the same.   Equity release and DB transfers tend to be individuals within the firm but not all of them.  The days of jack of trades, master of none have mostly gone.

Something like 98% of consumers don't need specialist advice.  Retirement planning is not going to be specialist for the majority (and I say that as someone who has further qualifications above the standard in those areas)

"Twenty years ago, the list would not have had the salesforces and every IFA would have been on there."
I'm not sure what the solution is TBH. Unbiased have to make money, and I'm assuming cost per click/SEO competition is ever increasing. They therefore want as many advisers paying for leads to cover their costs. Adviserbook doesn't seem to have gone anywhere.

I am not sure what the solution is either as the directories are commercial entities and have to make money to exist.    An industry body would be a good way but IFAs have been very ineffective when it comes to having an industry body.  Unbiased used to be the best way but it went very commercial.   And that very often happens.  Look at how networks started and where they are now.

 As it stands, unbiased is not a good consumer option as it effectively points people towards the salesforces and networks and turns the consumer into a lead for a company that wants to buy leads.   Most advice firms dont need to buy leads.   Salesforces tend to have the least qualified and experienced staff.      Networks are not what they used to be as they now have to force all their members to work the same way and their systems and controls are set to the lowest common denominator.

"Why do you think a general practitioner firm will not be able to give specialist advice? "

I think it must be pretty inefficient in terms of processes, learning the specific tools, and trying to understand the particular challenges that each group of people might face - for example a mid 30s person with lots of Microsoft stock options is going to have very different questions to someone in their mid 50s, fed up with their job and wondering when they can retire. 

For example, would I invest a lot of time in a tool such as Timeline if I was advising tech entrepreneurs in their 30s, unlikely. 


"unbiased is not a good consumer option"

No doubt they've made some suboptimal choices, but I'm not aware of what's currently better - but am open to suggestions.

dunstonh

Given the uncertainty that someone at retirement faces, with unknowns around longevity, returns and inflation, there's a fair amount of investment in time and tools to give someone the confidence that they can afford to finish work.

None of that makes it specialist.

You only have to look at the discussions on here to see how much people (understandably) struggle with the topic. In the IFA world, you often hear of retirement planning strategies that have no evidence to back them up - happy to give many examples.

Different people want different things. For example, a 20 year old isnt going to want detailed cashflow planning on their retirement as it would be a complete waste of time and energy.  Mainly is it would be inaccurate and pointless.  Whereas someone closer to retirement is going to need more detail and drawdown planning much more detail.

None of which is specialist.

BritishInvestor

dunstonh said:

Given the uncertainty that someone at retirement faces, with unknowns around longevity, returns and inflation, there's a fair amount of investment in time and tools to give someone the confidence that they can afford to finish work.

None of that makes it specialist.

You only have to look at the discussions on here to see how much people (understandably) struggle with the topic. In the IFA world, you often hear of retirement planning strategies that have no evidence to back them up - happy to give many examples.

Different people want different things. For example, a 20 year old isnt going to want detailed cashflow planning on their retirement as it would be a complete waste of time and energy.  Mainly is it would be inaccurate and pointless.  Whereas someone closer to retirement is going to need more detail and drawdown planning much more detail.

None of which is specialist.

"None of that makes it specialist."

I personally think it's something that requires a lot of investment in terms of time and effort to give people the best outcome (and therefore lends itself towards specialism, a specialist being "a person who concentrates primarily on a particular subject or activity; a person highly skilled in a specific and restricted field."), but of course, everyone has different views. 

" For example, a 20 year old isnt going to want detailed cashflow planning on their retirement as it would be a complete waste of time and energy. "

Agreed, and it goes back to my point about having a consistent process and a target market.

Ciprico

To get back to the original post, it is not difficult consolidating DC pensions, really just a matter of filling in a few forms.

Some research is required to pick the most appropriate platform, establishing your risk level and buying corresponding funds, but it is not rocket science...

There is plenty on advice on this forum for both.....