QAfter very many years with my local bank, I have recently found out that it will no longer be offering an advisory service. I had a good relationship with my bank adviser and am cautious of making major financial decisions without at least some form of advice. What course of action would you advise I take?
AWe have recently seen several high street banks announcing that they will no longer offer face-to-face investment advice to some or all of their customers. Many argue that the recent retail distribution review (RDR), introduced on 31 December, has made it completely unprofitable for them to offer this service, whereas others are restricting it to their most affluent customers.
The aim of the RDR was to improve the standard of advice offered in general and to eradicate the problem of mis-selling, but the cost of adhering to the new rules has been deemed excessive by some organisations. This means that even more people have been left stranded without a financial adviser when they have used one in-branch for years.
So what is the result? Essentially, customers of these high street banks potentially face a situation where their current adviser will no longer be available. Putting it bluntly, many people are being “orphaned” by some of the financial institutions who no longer wish to provide an ongoing service.
It sounds like you’re one of them, so what can you do? It’s essential that you do act because financial advice should not be about selling, it should be about creating a long-term financial plan that can adapt to you and your family’s changing circumstances and is reviewed on an ongoing basis. Your family’s financial goals are too important to be threatened by lack of management.
The ever-evolving economic landscape means that your previous financial planning arrangements may no longer be suitable for realising your current goals for a variety of reasons. This is why ongoing advice is essential, even more so if you are paying for this via a fee or commission and not actually receiving any advice. Why pay for something that is not being delivered?
One option is obviously to look after your own affairs. Many companies now offer their own execution-only services where no advice is given and this route could be right for you if you are confident that you have the necessary information and can do the research required to manage your own decisions. However, it is important to remember that financial planning is not purely about how and where you invest money; there are very many other areas to consider, such as inheritance tax planning, where advice may still be required, as these areas can be complex and fast-changing.
The best solution, where possible, is to find a qualified independent financial adviser. Speak to friends who you know have taken this kind of advice and ask them for referrals. Another option is to use a website, such as www.unbiased.co.uk, to find firms in your area. Key issues to understand are the company’s status and whether they are independent or are tied to a particular provider.
Our view is that those firms that are independent can review the entire marketplace for you, so look at what their charging model is, what service propositions they offer and how/whether they ensure that your financial plan will continually be reviewed in the future. If you have lost your bank adviser, it’s not insurmountable but it’s important to make other arrangements to avoid being left in the dark financially.
• Chris Malcolm is a director at Kelvin Financial Planning (authorised and regulated by the FCA 568257)
• If you have a question you need answered, write to Jeff Salway c/o The Scotsman, 108 Holyrood Road, Edinburgh EH8 8AS or email: firstname.lastname@example.org