The Smart Money Is On Independent Financial Advice
The Smart Money Is On Independent Financial Advice: Published in The Echo on 10th June 2021
As we ease out of a long, difficult lockdown and businesses begin to re-open, the importance of smart money management comes into focus. Now more than ever, clients are conscious of protecting and growing hard-earned profits and finding smarter ways to invest and manage their finances.
In many ways, the financial sector is undergoing a step-change. Traditional banks are being challenged on many fronts; as they become squeezed on both the commercial and retail sides, funding for both business and property development is moving increasingly to the private sector. As deposits in traditional banks lose saver’s money (and soon to cost money) retail customers are switching to online, low-margin banking options like Revolut and N26. As a result, retail banks are moving into wealth management – just look at Bank of Ireland’s interest in Davy’s and similarly AIB’s purchase of Goodbody’s. Bank of Ireland’s ownership of New Ireland and AIB’s tied-agent relationship with Irish Life is a further example of market consolidation and a reduction in independence across the sector.
There is a common thread running through all of these different trends; trust. The recent Davy and Dolphin Trust scandals as well as the various Bitcoin scams will have done little to bolster an already fragile public faith.
All of this reiterates the value of independent, objective wealth management advice. Opaque commission structures are overly complicated to hide the real benefactors of such arrangements – and its rarely the client. But I believe that the days of obscure commissions are numbered. The future is a fee-based, holistic model of wealth management and financial planning that delivers much more to the customer than the traditional model of commission heavy financial products. To give just a few examples, we recently advised a client on how to make changes to their investment portfolio that will save €4,000 annually. Similarly, we helped another client save €20,000 over the life of an illness protection policy. These may seem extraordinary cases but sadly, they are very common.
While a lot is in flux within the sector, some things remain unchanged, such as the value of a personal approach to financial planning. Each of us have different situations, means and goals; to really add value to a client’s financial planning we need to know and understand their individual story. Clients recognise the value of this – there is a trend emerging in the UK where clients are moving from large wealth management firms and choosing instead bespoke, personal services.
The pandemic has taught many hard lessons. We know that the rainy days do indeed come and we need to be prepared for them. But we also know that brighter days will follow close behind. Financial independence, and knowing how much is enough, helps us to really embrace the here and now.
Liam is a senior financial planning consultant living in Blarney. He heads up the new Cork office of Investwise Financial Planning recently opened in Horgan’s Quay. One of Ireland’s few fee-based, privately-owned financial advice firms, Investwise Financial Planning offers expertise in financial planning, wealth management, pensions and investments for individuals and business owners. By operating a transparent fee structure instead of product commissions advice is impartial and in the best interests of the client. Established in 1988, Investwise Financial Planning advises 300 clients with a funds under management (FUM) value of €140million.The team of six advises a diverse range of clients including retirees, self-employed individuals, company directors and senior management.