Why ‘versus’ has no place in financial advice

The complex world of financial advice is made even more difficult for clients who are being asked to choose between one type of investment and another, or one type of adviser as opposed to another. In fact, The Pensions Advisory Service chief executive, Michelle Cracknell, wants advisers to stop talking about ‘versus’, to encourage consumer engagement in financial advice. She made her point when talking about the challenges to financial advice at a Personal Investment Management & Financial Advice Association summit. She argued that all this talk about independent financial adviser versus restricted adviser, guidance versus advice, and active versus passive are clouding an already difficult issue. She wants the word ‘and’ to replace versus.

Making the point with pensions

The TPAS chief executive said pensions would be a good place to start simplifying the financial landscape, since there are more than 50 products on the market in this area. She said most people in the UK have no experience of regulated financial advice and what it can deliver. This is also an important area because the rules have changed in recent years. However, many people are reading the headlines about pension reforms but do not know how it can apply to them.

Encouraging consumer engagement

She said they need to consider how to transform clients into active consumers of financial services, rather than recipients, and that it would take time to change consumer perceptions of this sector. Financial service providers need to find different ways to engage consumers and encourage their loyalty. One way could be to adopt coaching models that are used in the USA.

Obviously, it pays to spend quality time with clients or potential clients to discuss their finances and their individual needs. One way to free up more time is by investing in financial adviser software, from a company such as www.intelliflo.com, which can deal with the back office and administrative duties. Advisers then have more time to spend in front of their clients and will also receive timely reminders about appointments, policies maturing or the need to routinely check portfolios, for example.

The world of finance is a challenging sector, where trust is an important issue. People buy from those they have faith in, so finding ways to communicate with them without putting them off is an important step.

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