Some of you may know that I co founded a group called Nextgen Planners. It is basically a community of forward thinking and predominantly younger financial planners. At the moment we are building our core values, i.e what we believe is right. Every organisation needs core values as without this the whole message gets diluted.
In these discussions, I am keen for our members to sign a client charter or a fiduciary oath that says that they will put the clients best interests first at all times and avoid conflicts of interest.
Here is an example of what this looks like from the US.
You would think that adhering to a pretty basic set of client focused rules would be an easy task but unfortunately in the world of financial advice in the UK, this is very rare and likely to be controversial, particularly by those with vested interests against it.
Anyone who knows me, knows that as an adviser, I am fiercely independent and proud of it.
I don’t believe that you should ever subject a client to your personal agenda as not only is it not a great long term business plan, it is in my opinion morally wrong. It really frustrates me when I see conflicts of interest in financial advice as you can see:
So here is my dilemma; the majority of financial advisers in the UK (if not the world) are employed by bigger corporations to sell their products.
I recently listened to Tim Ferriss’s brilliant podcast in which Tony Robbins actually describes the situation perfectly. It was personally reassuring to hear this issue make it to the mainstream.
Tony recalls a story in which he recently found out from a true financial planner that the majority of financial planners in the US were really brokers (or stockbrokers as we could call them) working for the bigger organisations and the true “unbiased” financial planners were in the minority. In simple terms, you would get brokers that offered apparently top end services for clients when really they were just distributing expensive investment products from the company they were employed by.
This is why he joined forces with one of the best "real" financial planning organisations in the US - http://getasecondopinion.com/ and now he believes very strongly in the fiduciary oath so much so that he has staked his reputation on it.
Unfortunately in the UK, the majority of the large financial advisory corporations are shareholder backed. I could name you lots of companies that when all is said and done, they operate in the same way as Tony found out above. Most of my readers are smart entrepreneurs so can I ask you a question:
Do you think a shareholder backed company has the client or the shareholder’s best interests?
I know where my money is and history has taught us that it is shrewd money.
So this is why I am keen to draw a line in the sand when it comes to Nextgen. When designing the core values of the Nextgen group, a group of young stars of the financial planning world, we have to achieve to do better. We have to advise without conflict whilst running good profitable businesses that will be around for many years. These are the peers that I want to align myself with and these are the types of businesses that provide the best outcomes to clients.
As a reader if you ever come across a financial adviser, I want you to address this conflict of interest issue straight away. Yes you will pay fees for financial advice.