Money – its future looks bright, its cost is clear

From January 1^st 2013 “commission will be banned for investment advice including pensions and all financial advisers who sell investment advice and pensions will need higher qualifications than they do now”. This is how Martin Lewis of BBC Radio 4’s Money Box began a discussion on 29^th September.

He went on to introduce Merryn Somerset Webb, Editor in chief of Money Week for her views and comments on the dramatic changes that will affect Financial Services in Britain from the New Year. Merryn Somerset Webb is happy with the changes saying “…I think, excellent news for consumers because it will remove commission bias from the entire financial process … the most important thing is that it will make costs completely transparent because cost is a huge factor in the returns you might get from any kinds of asset.”

Martin Lewis accepted these points but challenged the cost issue saying that he had heard that IFAs were charging £150 an hour, so in three hours the costs could be as much as £450. To this Merryn Somerset Webb said “well they’d be paying just as much or more if they are paying by commission it’s just they won’t have known they’re paying it.”

It is worth saying at this point that there are IFAs who will conduct the first meeting in their offices without charge - but it is true ... 'times they are a-changin' (Dylan '64, what foresight).

Merryn goes on to say that “…it’s very odd to think that a professional, well qualified financial adviser should come in any less than that, we expect to pay a couple of hundred pounds an hour for legal advice, why should we not pay the same for good financial advice?”

The argument – for until the effects of RDR come into force it can only be a discussion point – the argument is, that for consumers with less than £100,000 of assets, the cost of using an IFA could now be prohibitive and that independent advice has been placed financially beyond them.

For some IFA’s this is probably the case. Lloyds TSB said that it would close its advice service for customers who have less that £100,000 to invest because research undertaken by the bank indicated that customers would not pay the fees to cover the cost of selling them things.

To a certain degree though there has always been a difference between institutional money makers and genuine independent advisers whose role is to build a relationship with clients in order to understand their needs and criteria to deliver not only best advice and appropriate action but also a very personal service.

Well established advisers, like Greycoat Financial Services, having adapted to various regulatory changes over the past 24 years have yet again worked hard to re-position their business and are well placed for the changes RDR will bring.

With such a history of regulatory change, it takes a good deal of professional time from business owners, advisers, technical and administrative staff who collectively support the advice process  to deliver the assessment, advice, recommendation, implementation and review - from the smallest pension contribution to the largest investment portfolio.

“From 1^st January, without commission, the only way to help clients manage their financial affairs and support their plans for an independent financial future is to charge a fee for the advice and service required” said Michael Hunt, Partner at Greycoat Financial Services.

The internet carries a plethora of information, yes, but it can offer no advice.

It can’t individualise the client status and needs, nor provide informed and relevant discussion; it can’t allow for pitfalls that may be caused by legal and fiscal changes year on year; and it won’t keep users up to date with prompts, feedback and asset valuations. It offers no answers, simply raising more questions – and, even if you do manage to ask a question, does the answer make sense!

To help lower level investors / savers - clients with less complex investment or savings needs, Greycoat have launched a Discretionary Service, whereby past clients contact their Adviser only when the need arises. This may be when an event in their lives changes their situation regarding mortgages, pensions, estate management etc. The initial meeting to understand the client's immediate concerns and / or needs is without cost but any work that might result from the meeting will incur a cost. These costs are made absolutely clear and in writing and will be agreed with the client before the work is undertaken.

What’s more and in anticipation of the lower cost requirements of certain clients, Greycoat is starting to commoditise certain investment, loans and savings vehicles. These offer lower cost, simplified investment solutions that fill a financial gap at a price that offers value to both client and adviser without compromising the quality of the advice being given.

Value for money is the key. Money is hard earned and has even harder demands made of it to sustain a financially independent future. Surely then there’s a high value in paying for the advice that will serve it (and you) best.

Clients with more complicated portfolios and / or larger sums under advice will benefit enormously from the changes. Two levels of service for such individuals planning their financial futures are the Annual Review and the Private Client Service. With the removal of commissions it is highly likely that the overall cost of their financial advice and the implementation of the recommendations given will be less than it has been in the past.

As with everything else in their lives, such clients will be able to budget clearly as part of their financial management and know the true costs set against their assets on investment. Such costs may in times past have stripped much from the asset value, so much that the investment would have to up its performance to make effective returns.

This is just the start of things to come.

We’ll look more at investment opportunities and consider the real costs of investment next time.

In the mean time if you want more information please visit www.greycoat-ifa.co.uk or call 020 7821 2420.

For information and advice:

Greycoat Financial Services
205 Victoria Street
Westminster
London
SW1E 5NE

http://www.greycoat-ifa.co.uk/

T: 020 7821 2420

F: 020 7828 1188

E: mylife@greycoat-ifa.co.uk

Are you ready? Britain’s best kept Financial Services Secret

There has been a lot of work going on behind the scenes at Greycoat (and everywhere else in the Financial Services world) getting ready for 1^st January 2013 – probably the biggest shake up in our Financial Services Industry and certainly Britain’s best kept secret.

If you Google FSA RDR you’ll find the answer – discover what’s behind the secret…

…alternatively READ ON – through this Blog, we (Greycoat Financial Services) intends to tell you all we know about the Financial Management changes brewing now and ready to serve by the end of the year.

If you are a client seeking financial advice or part of the Professional Network with whom we work closely to provide that advice, this Blog will develop into a useful source of information; independent financial advice; views and opinion on Wealth Management; best practice advice on managing financial management accounts…

…and, we hope, some lighter thoughts to show that even in a pretty heavy subject like this...

...we’re just people (professional people) helping other people (you) grow, manage and protect their personal wealth.  

LET’S START

This is how the FSA – Financial Services Authority – describe RDR (which is what all the fuss is about) on their website:

The Retail Distribution Review (RDR) is a key part of our consumer protection strategy. It is establishing a resilient, effective and attractive retail investment market that consumers can have confidence in and trust at a time when they need more help and advice than ever with their retirement and investment planning.

If you then click ‘Firms’ you will read this:

The Retail Distribution Review (RDR) was set up with the aim to improve clarity for people who are looking to invest, raise the professional standards of advisers and reduce the conflict of interest which is found in remuneration for adviser services.

The RDR aims to ensure that:

·         consumers are offered a transparent and fair charging system for the advice they receive

·         consumers are clear about the service they receive; and

·         consumers receive advice from highly respected professionals.

To achieve this we have published new rules that will require:

·         advisory firms to explicitly disclose and separately charge clients for their services;

·         advisory firms to clearly describe their services as either independent or restricted; and

·         individual advisers to adhere to consistent professional standards, including a code of ethics.

These changes will come into effect on 31 December 2012 and will apply to all advisers in the retail investment market, regardless of the type of firm they work for (banks, product providers, independent financial advisers, wealth managers, stockbrokers). 

This is a good, simplified summary of how we are preparing for the New Year.

But if you are a client seeking or already enjoying the benefits of independent financial advice and click ‘Customers’ to find out what the changes mean to you, you’ll enter a labyrinth of headline-driven articles and comments to navigate.

It is not the easiest source of answers to the questions you’ve the right to ask, which is in part why we have started this blog. Because, after all, this is about you, your money and the advice that helps you grow, protect and manage your personal wealth as you build towards retirement or enjoy life and a healthy lifestyle in retirement.

Thankfully, we (Greycoat) have prepared for RDR early. If you’ve questions, please ask and we will answer them or direct you to a fellow professional who can.

For information and advice:

Greycoat Financial Services
205 Victoria Street
Westminster
London
SW1E 5NE

http://www.greycoat-ifa.co.uk/

T: 020 7821 2420

F: 020 7828 1188

E: mylife@greycoat-ifa.co.uk