Post by Martin Bamford. Follow him on Twitter here. Image by eschipul.
It was interesting to read the report of a conclusion drawn by Liberal Democrat Treasury spokesman Lord Newby.
Speaking at a fringe event at the Liberal Democrat conference in Liverpool today, he said:
“The traditional model of the IFA looks to me like a doomed species. I think there will be a drift away from old fashioned financial advice.”
As unpalatable as this statement will be to many of our peers, Lord Newby is quite right.
In the future, the traditional model of delivering independent financial advice in an intensive, face-to-face environment, with all of the associated costs of regulation and delivery, will look far less attractive to some types of investors.
This is particularly the case when addressing the needs and preferences of younger clients. This client segment typically prefers to make their own decisions and avoid the perceived pressurised environment of meeting with a traditional financial salesman or adviser.
The Internet will rapidly become the preferred method of finding advice, information or guidance before investors make their own decisions, probably implementing these online as well.
This is not to say that there is no role in the future for the professional independent financial adviser.
In fact, we think that the future is very bright for a properly qualified and experienced adviser, delivering technically demanding and valuable advice to clients on an individual basis. It would be wrong to forget that a great many clients, particularly wealthier investors, place a lot of value on the relationship they have with their adviser.
As a firm, we will continue to provide our professional services to clients who want this relationship. We are also working hard to reach a wider audience who want online services, including advice through the Internet, in preference to a traditional adviser relationship.
In fact, this week we have launched a new service on our BrilliantWithMoney website, offering an investment risk profile assessment, an investment asset allocation model to consider and details of preferred funds in each sector.
The Informed Investment service can be delivered relatively cheaply, at a special introductory rate of £47, and will put investors in a better position to make their own investment decisions, without engaging with an adviser.
IFAs are in general, as Lord Newby has said today, “a doomed species”. The modern professional adviser is very much thriving and looking forward to a profitable future.
