Why use an IFA

Why would you use an IFA? - A personal take on life as an IFA from Trevor Phelps.

Well, if there is one thing being in financial services for nearly 20 years has taught me it is; that if you walk up the garden path and the cat appears from behind a bush and follows you to the door there is a 99% chance the client has forgotten your visit and is out. But the main lesson is that if you do the right thing for your client and look after them, they will ask you to help them when the need for financial advice arises in the future. It is all about planning for the future and to plan for both good and bad things happening to you.

I started in the Financial Services industry 23 May 1987 and had a new house, a wife and a year old daughter, plus a second child due in the October. This was going to be my year with a new house, a new job and a new baby. Sadly my wife developed cancer and gave birth to the baby 12 weeks prematurely and died 24 hour after. My world fell apart. Fortunately the least of my worries was money, as I had life assurance that paid for me to employ a nanny and continue my work and my sanity. So now if I visit a family with children who are still dependent the first thing a talk about is Life Assurance for family protection and Critical Illness Cover, before the usual Savings, Pensions and Mortgages. I generally contact clients once a year to see if existing contracts still suit their needs or if any new financial needs have arisen, such as a new baby, inheritance, retirement etc.

As an Independent Financial Adviser it is easy to run away with the idea that as a "professional", prospective clients come to you because you are a professional, but I believe that the truth is a bit more complex. The reality is, that as with any prospective client choosing a tradesman, they rely on past performance. When water comes through the kitchen ceiling they dial the plumber who fixed the leak on the radiator in the hall last year. When there is a smell of burning in the fuse box, they contact the electrician who put the extra socket in the conservatory when it was built. It's all down to people we know and trust not a box in Yellow Pages. We are all creatures of habit and like to keep a group of trades (or professionals) at hand to call on in times of need. Most people also understand that we need to earn a living, so sometimes a fee has to be charged.

With the increased cost of arranging financial services products in the early nineties it was as sure as night follows day that home service providers such as Prudential, Pearl and the like would not survive in that form. It is sad that the government complains about the saving gap and how we are not saving money like we did in the past, and even borrowing more money than we ever did. But it is legislation that has stopped a big percentage of the population having any regular contact with the Financial Services industry and saving regularly. Also by the government putting a price on University education making students take student loans for their education, more young people start life thinking that it is "OK" to borrow money than ever before. What are we giving them an apprenticeship in debit!

So where do the majority of the general public get financial advice? It seems that if it is not from an Independent Financial Adviser then it is the Bank or Building Society. With the regulatory burden on the independent sector most of the previously independent Banks and Building Societies have changed to be tied to one assurance company or multi-tied to a group of assurance companies. This also manifests it self, in the average age of Independent Financial Advisers being over 50 as it is difficult to attract new blood into the industry. While often the young adviser that you may be ushered in to see at the Bank, might look uncomfortable in his suit, be on first name terms with the spots on his chin and have a knot in his tie the size of which is usually seen securing a cruise liner!

It is not that I am against Banks or Building Societies as they are the very best place to keep money whether current account or on deposit, but I do hear for Bank and Building Society customers that they rarely see the same adviser twice as they always seem to move on, to possibly greater things.

So my final word is if you need financial advice, make sure you get an adviser that will stay the course and is not a "one hit wonder" taking the big commission for one contract and never seeing you again. Be sure they are willing to be there for you when you need them after the first initial visit. Also take references and find out if any of their clients are prepared to recommend them. And finally if you make an appointment to see them in you home, make sure the cat knows you are home as well.