The Happy Financial Adviser (Barrier 3. The Personal)
The following blog post is an extract from The Happy Financial Adviser. A book written by Truly Independent Director Andrew Goodwin. To purchase your own copy click here.
For pension and investment business there is no longer the ability to earn income via commission. You have to charge a fee for the advice you give and more importantly, for any ongoing service you provide.
When this idea was first mooted, it was a daunting proposition to the financial advice industry and many worried about how charging a fee for advice would ever be received by clients. They needn’t have worried. As with many business transactions, the success is in the initial pitch. It’s about good communication and delivery of your proposition.
While some financial advisers would welcome a return to the commission model, many have successfully transitioned to fee-based advice, and a return would put control back into the hands of the product providers. If anything good has come out of RDR, it’s the more professional approach to business. It is the sharp distinction between the product provider and the intermediary, you.
Although the change from commission-based advice to fee-based advice has been a positive move, what has not changed that well is the transition of the mental process. The advice method used by advisers before RDR has hardly changed. Advisers are still led by providers and their products but not because of high commission returns, which was the original biased problem, but because the product fits and they know it. Advisers still sell products! Advisers still talk about ‘top-ups,’ or they process a product based upon the clients being ‘insistent.’ This is all nonsense and is a hangover from the days of commission. It is the one change that has dragged, and very few are dealing with it.
Your reason for change is to be happier – it’s that simple! Stop fighting change and move with it. Take the journey – it’s more fun. It has not been an easy transition, but one you would now not reverse.
