As I was lying face down on the massage table yesterday afternoon, calf muscles being pummeled and holding back my girly screams, my physio posed an interesting question:
“How do you make any money?”
You see, I had told her I was a financial adviser (a job description I interchange with financial planner, IFA, wealth manager or Chartered Financial Planner, depending on who I’m talking to) and something was confusing her.
This was because her experience of financial advisers in the past had been those offering ‘free’ financial advice.
You still see this being offered by many banks and, sadly, by some independent financial advisers.
The offer of a ‘free financial review’ of course only serves one purpose; to put the financial adviser in a position to sell you a product, which is how they get paid.
This isn’t how we make money, by the way. Instead, we charge a fee for advice (the really valuable part of what we offer) and ongoing reviews, with a smaller fee for implementing any recommended tax wrappers or investments.
Today the Financial Conduct Authority (FCA) has issued a consumer warning, telling people to ignore offers for ‘free pension reviews’ from unauthorised firms.
This follows the recent Budget announcements where some rules regarding pension access in retirement were relaxed. It seems these unauthorised firms are attempting to piggyback on these rule changes to take advantage of unwitting investors.
Hopefully the FCA will go a step further in due course and warn authorised firms to stop offering ‘free pension reviews’, and free financial advice full-stop, as the only purpose of this approach is to flog products which can facilitate commission or adviser charges.
Most of us are acutely aware there is no such thing as a free lunch. You always get what you pay for, in financial services and in life.
