Most of us like to do a job ourselves if it will save a little money. We might resolve to paint a bedroom rather than pay a decorator for the privilege, for example, or we might replace a car’s flat battery instead of summoning Halfords to work its magic.
Sometimes the DIY option turns out just fine. The bedroom looks perfectly acceptable. The car obligingly stirs into life at the first time of asking. We duly pat ourselves on the back and revel in our self-sufficiency and savvy.
Yet there are also occasions when we might regret our determination to go it alone. The walls begin peeling within days. The new battery refuses to neatly slide into the space vacated by its predecessor. You know how it goes. We’ve all been there.
Such unfortunate instances tend to fall into the “false economy” bracket. We try to avoid spending a few pennies but end up shelling out more than we would have if we had called in a pro at the outset.
Granted, the lesson might not be an outrageously expensive one if it costs us only a few tins of paint or a seldom-used socket set. But what if we were to apply this experience to building a secure financial future?
“Know-about” isn’t the same as “know-how”
There are literally millions of people in the UK who don’t seek professional, independent financial advice. Many feel they shouldn’t have to pay for such guidance, while others simply see no benefit in it.
Their reluctance has increasingly been fuelled – and even ostensibly justified – by suggestions that consumers should be able to make their own financial decisions if they have the right information. This narrative has gained notable ground in recent years[1].
Where, though, should said information come from? According to numerous studies, the most likely sources are frequently family members, friends or even fellow pub customers[2].
I’m not sure I would trust someone I met at a bar even to advise me on how to apply a coat of primer or distinguish a cathode from an anode. I certainly wouldn’t trust them to plan a lifetime’s worth of saving and investing for me.
After all, knowledge can be easy enough to acquire but considerably less easy to use. In other words, there’s a major difference between genuinely knowing what you’re doing and merely thinking you do.
Showcasing expertise and insight
This crucial distinction explains why decorators can still earn a good living. It also tells us why the best mechanics are never short of work.
By the same token, it clearly underscores why advisers should be regarded as providers of a truly essential service. In this sphere, as is any other, expertise and insight should count for a lot.
One reason why many people seem to have lost sight of this fact may be that some of the so-called “advisers” of the past fell a long way short of the standards embodied in the advisers of today. Frankly, a significant number of them were unworthy of the designation.
But that was decades ago. One of our greatest challenges right now is to draw the wider public’s attention to the massive change that our industry has undergone since those dismal days.
On the whole, today’s advisers are better qualified than those of yesteryear. They’re more committed to their own continued development and more aware of the importance of regulatory compliance. Maybe above all, they fully appreciate and respect the role they have to play in transforming and enhancing lives.
Affordable, approachable, independent… and indispensable
A key question, then, is how the adviser community might successfully raise awareness of what it has to offer. How should we go about cementing our status as ambassadors of financial wellbeing? How do we highlight the argument for financial advice for all?
Promoting low cost is perhaps the most obvious answer. In tandem, there ought to be sizeable merit in moving away from outdated “one size fits all” structures and instead embracing a sensible array of service levels suitable for a range of demographics.
Yet this isn’t just a matter of pricing. It’s also a matter of cultivating a strong work ethic, expanding our skills, abandoning restricted advice models and constantly striving to demonstrate credibility in the eyes of existing and would-be clients alike.
Ultimately, we need to be viewed as affordable, approachable and independent. We need to be perceived – rightly – as dedicated specialists whose knowledge is not only worth paying for but absolutely indispensable.
There may always be a measure of appeal in the DIY route, but jeopardising a financial future is a million miles removed from wasting a tin of Dulux or losing a battle with a cramped engine bay. Our job begins with helping everyone understand that.
Andrew Goodwin is co-founder and CEO of Truly Independent and the author of ‘The Happy Financial Adviser’.
[1] See, for example, FCA: “What firms and customers can expect from the Consumer Duty and other regulatory reforms”, September 29 2022 (https://www.fca.org.uk/news/speeches/what-firms-and-customers-can-expect-consumer-duty-and-other-regulatory-reforms).
[2] See, for example, Daily Telegraph: “Consumers turn to friends and family for financial advice”, June 26 2011 (https://www.telegraph.co.uk/finance/personalfinance/money-saving-tips/8600595/Consumers-turn-to-friends-and-family-for-financial-advice.html); and Peer2Peer Finance News: “Fifth of young people use social media for financial advice”, May 26 2021 (https://p2pfinancenews.co.uk/2021/05/26/fifth-of-young-people-use-social-media-for-financial-advice/).
