Gap between what advisers provide and investors expect needs closing
In the debate about adviser remuneration, not enough attention has been paid to improving the understanding of what clients can expect for their money, says Mr Philip Galagher, head of wealth management for Equity Trustees Limited (EQT).
“It seems to me that there is a gap between what potential clients think they are going to get and the services that advisers actually provide,” he said.
“In the past it may not have been such a concern for clients as they did not pay the adviser directly for the services given.”
“However, no that a direct link between adviser service and cost to client is being established, it will be of great advantage to the adviser sector overall if potential clients had an idea of what they can expect, even before the first meeting that establishes the cost for the services provided.”
“There is a great deal of anecdotal evidence that people first visit advisers expecting specific investment advice and opportunities that will give them an immediate return advantage over other investors, or investment knowledge they did not have before.”
“Potential clients need to understand this is not what most advisers do, and that much of the advice role covers aspects such as helping set up finances, explaining what needs to be done to manage and protect wealth, how to avoid paying unnecessary tax, how to take a disciplined long term view to wealth creation, and even to look at concepts such as intergenerational wealth transfer strategies and the like.”
“The way advisers help investors think about what they are capable of achieving financially, where they want to get to, and how they develop an approach that brings the two together, is not as widely understood as it should be.”
New clients could be disappointed in their early meetings with a financial planner if deep down they are hoping for suggested investments where they can get in at the ground floor and earn fantastic returns.”
Mr Galagher suggests that the adviser industry needs to communicate that such returns simply don’t exist and that investors should stay away from any adviser who even remotely hints at especially high returns.
