Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
Financial advice lessons from Billions
While watching one of the most popular TV series in recent years, Billions, which follows the story of hedge fund billionaires, you wouldn’t necessarily expect to gain business ideas or insights. Perhaps investment ideas given that the characters in the series are known for pushing the limits to generate the maximum return possible, but definitely not business advice.
Yet the episode in question offered a rare insight, in my view, into what many financial advisers are experiencing today. During the episode, the lead character, having taken over a hedge fund that is clearly in decline, decides to flip the narrative on his investors.
That is, rather than seeking to hold on to every client and their investment, even though they wish to leave, he decides to give their money back, indicating he doesn’t want their money. While there was also an ESG lens to the decision, suggesting it was “dirty money,” it highlights an important evolution in businesses and professions.
Speaking to many other financial advisers about the environment, they will likely confirm that there is no lack of people looking for advice. In fact, many firms are seeing a surge in new clients that they are struggling to deal with. This is the direct result of the departure of the banks and other large financial institutions from the sector and the desertion of thousands of advisers due to further education requirements.
Most financial advisers came into the industry, or at least stay in it, because they inherently enjoy helping people. Financial advisers play an important role in the economy, guiding people through the most challenging and emotional parts of their lives. But with a flood of clients it has become more important than ever to identify who each adviser can help most.
The most common occurrence is an existing client referring a friend to the firm, but that client sits outside your niche which may well be retirement advice. Naturally, we feel obliged to help despite it being less efficient and more difficult to add value. Advisers, after all, are just as bad as saying no as any other profession or industry, particularly given that this could disappoint the referring client.
The future is clearly going in two ways, become a specialist and gain scale through specific knowledge and niche, or get big and employ ever more staff.
