Are you paying too much for financial advice?
You may still struggle to secure a face-to-face appointment with your GP, but what about your financial advisor?
When we polled FT Money readers, more than two-fifths (41%) favored maintaining the convenience of digital dating, although 33% preferred a hybrid model.
Judging by your numerous emails, those who had a good relationship with their advisor before the pandemic were the ones who felt most connected when face-to-face advice turned screen to screen.
FT Money reader John Foster says it all comes down to the personal touch. He was called directly by his advisor from the start of the pandemic, and continues to feel reassured and well informed about his financial situation.
“I’m by no means their biggest customer, but I certainly feel like I am,” he says. “Would I recommend them? Clearly, yes.
However, those who felt neglected before the pandemic tended to feel even further removed from their advisers and dissatisfied with service.
A reader wrote to say that he and his wife had received “a lot of emails, but just a Zoom call and a few short phone calls” from their wealth manager, who they said dodged questions about the poor performance. of their investments.
Six of the couple’s seven funds in the couple’s portfolios are in the bottom quartile of Trustnet’s one-year fund performance index – and one of them is the wealth manager’s own fund.
“Seemingly unnoticed by him, it’s a measure of the level of interest our advisor has in our business,” he wrote. “So I wonder if I’m going to waste my time complaining formally.”
Certainly, the availability of free introductory digital meetings has made it easier than ever for unhappy customers to shop.
Charlotte Ransom, founder of tech wealth manager Netwealth, says she inherited many dissatisfied customers during the pandemic.
“The closures were a trigger for families to look at their finances, the performance and service they received and the fees they paid,” she says.
Often, clients migrating from more expensive discretionary services have been persuaded to create offshore bonds as a tax planning tool without the wealth to justify it.
“Other than that, the financial advice they’ve received from their wealth managers has generally been pretty good,” Ransom said. “The problem is, they’re paying way too much for it and usually have to pay an annual consulting fee, although it’s not something they need every year.”
The advent of more digital services has led customers to expect this to reduce costs. In our survey of FT Money readers, 41% said they expected the cost of pure digital advice to be lower, and 29% expected it to be significantly lower.
And when FT Adviser surveyed its professional readership, nearly half agreed that they would be able to cut costs (over time) by reducing office space. However, about the same number feared that investing in IT would prove to be the biggest barrier to delivering better digital services.
I caution that these were quite small samples of a few hundred people, but this is a real topic of discussion.
Just look at the success of the low-cost advice providers that emerged during the lockdown, most notably Vanguard, although they are not suitable for those with more complex cases.
When it comes to more “traditional” forms of financial advice, companies tell me they see the benefits of having a more blended model.
Colin Lawson, Founder of Equilibrium Financial Planning, says his clients are happy to evolve into a “phygital” relationship with Zoom for administrative remedies and face to face for anything complex or critical, such as inheritance rights. or intergenerational planning.
“We found that people weren’t able to converse the same way online, postponing plans and decisions until they could meet with their advisor in person, potentially increasing their tax liability,” he said.
However, one thing that is seriously hampering the digitalization of our financial lives is the poor progress that large pension funds and life insurance companies are making in this area.
Anne McClean, partner and financial planner at Smith & Williamson, says the need for “wet signatures” on physical documents still causes huge delays even as the economy reopens. “The worst example I have had is waiting over 100 days for a in cash transfer to pass, ”she said.
Working from home has made mailing documents a challenge. A lot of counselors tell me they’ve wasted hours trying to reach by phone and email. “If someone ever picks up the phone, they say ‘send us an email’, then your email goes unanswered! ” we are complaining. Customers of advisers, we are paying for this digital nonsense.
Large providers, who conveniently have a rather indirect relationship with the people whose money they manage, seriously need to question themselves. The speed of innovation surrounding video wills shows what should be possible in this space – and the future of financial advice will remain decidedly analog until it enters the 21st century.
Jokes from finance people
Having a good sense of humor might not be a quality that would top your list when choosing a financial advisor, but our recent Twitter contest has shown that there are certainly tricks in the profession.
The annual awards ceremony hosted by our sister publication, FT Adviser, is usually a lavish in-person dinner. This year, to host the Zoom presentation, I challenged my followers to replace a word in the title of a movie to make it more suited to an audience of financial advisers (follow me on Twitter or search for the hashtag #alwaysapensionsangle if you want to read the mall).
My own starting point for 10 was “The LTA is not enough” (the lifetime allowance limits for pensions are a dramatic subject for our readers and their advisers).
Of the 150 entries we received, I was particularly tickled by “One flew over the cuckoo nest egg” (thanks to lease specialist Graham Pack), “Good Will Drafting“ (Hats off to Craig Rickman of Lang Cat Consulting) and “Four Weddings and a Funeral Plan“ by Anne McClean.
Not surprisingly, the cost of advice was a popular topic. Paul Lewis of BBC Moneybox offered “License to Bill“, financial planner David Hearne proposed “Crouching Tiger, Hidden Charges“, and the FT’s Naomi Rovnick suggested “Despicable fees“.
Other entries from FT journalists, including “Saving Private Pensions“ of our own Joséphine Cumbo (she had a lot of “likes”) and “Triple Lock, Stock and Two Smoking Barrels“ Amy Austin, FT advisor.
As retirement promises go up in smoke, financial planner Dan Gaylor suggested “Enemy of the State Pension“. I can think of a few ministers who deserve a cameo role in this one.
Former Pensions Minister Sir Steve Webb proposed ‘Love Actuary“, and even the Pension Protection Fund joined in by proposing “It’s a wonderful lifeboat”. I was very impressed with “Intentions to accumulate“ from financial planner Charlene Young.
However, financial planner Steve Buttercase was crowned the winner with his entry “Commission Impossible.“. Mixing a Tom Cruise action thriller with the Retail Distribution Review ramifications would make a compelling film for financial advisory professionals – and Steve’s Prize arrives for a canteen lunch with FT’s pension editors in Bracken House.