The value of planning

I recently read a very lengthy report regarding fair fees in financial planning, comparing the pros and cons of various charging structures. When looking at the various options; hourly fees, fixed fees, percentage-based fees, it’s clear that each has its benefits and pitfalls and where on the scale that fits will ultimately depend on the complexity of a client’s situation. I’m not sure that there is any right answer.

I’m proud of the transparency in our charging structure. All our fees, at all stages of the advice and planning process, are clearly disclosed, something that isn’t always the case with our competitors. I’ve had clients query why a fee would be paid, when their previous adviser did it for free. Erm, no, they didn’t, they simply didn’t disclose fees deducted from the client’s investments!

I feel it’s extremely important that we are able to both justify our fees, but also to ensure that they represent good value for clients. But how do you measure that value?

Planning for the future

Research suggests that where financial advice can add the most value is through a continual service and relationship, particularly during times of market stress. One report comparing real-life returns of advised and non-advised investors’ portfolios showed advised portfolios significantly outperformed. After examining all possible factors, they concluded that the advice provided greater long-term discipline and more stable emotions, which in turn translated into a lower tendency to over-trade and overreact to market events, and a higher tendency to maintain a diversified, balanced portfolio.

So, there’s evidence of better performance. However, what about things like tax savings? Planning and effective use of the various tax allowances; ISAs, personal savings allowance, dividend allowance, pension contributions, inheritance tax planning, etc, all adds to the overall portfolio performance.

There’s an argument that any good financial adviser might be able to achieve these things.

Our approach

We believe we’re different! Products are not the focus – our clients, their very personal goals and objectives, are our priority. True financial planning, rather than product driven financial advice, is what makes the difference and what adds the greatest value.

The financial planning process, really getting to know our clients, helping them define a clear plan, implementing that plan and continually reviewing it (as their objectives and the world around them changes) is what makes the difference. Our clients tell us that they feel financially well organised, feel confident that they have a plan in place and know that they’re well positioned to achieve their objectives, whatever life might throw at them. Those feelings can’t be measured but they are invaluable!

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