You may well ask, “Why would an IFA join this chap, instead of just setting up another company to do the FP work?” Here’s why.
Many a financial adviser has discussed over a beer, at some time or other, going non-regulated with their financial planning business. Fed up with all the red-tape and asking, “Can I lift my Financial Intermediary model and drop it into a Non-Intermediating Financial Planning business?”
To answer the question, we must first consider the two types of financial planning businesses. There is the traditional Financial Intermediary, and there is the emerging Non-Intermediating Financial Planner.
The two models are hugely different. The Academy argues that, you cannot just take the ISO22222 business model of intermediation and drop it into a non-regulated non-intermediating financial planning firm. You must start again. Here is why.
Financial Intermediation (FI)
Intermediation is a regulated activity under most jurisdictions and territories. The intermediary is paid commission, or adviser fees contingent on transactions (same thing). Or, the adviser fee is expressed as a fixed fee percentage of assets under management, and deduction from the product may be facilitated. The adviser holds agencies with product providers. There is a focus on products and product transactions (buy and sell). The adviser gives opinions on or recommendations relating to specific advice on specific products. This can result in the adviser’s interests conflicting with those of the client. The intermediary may offer a product management service (vertical integration). Product. Product. Product.
Non-Intermediating Financial Planning (NIFP)
The NIFP does not intermediate. The service is a non-regulated activity. Fees quoted are time and/ or knowledge based. They sell plans, not products. No agencies are held with product providers. No products are managed. No referral agreements are in place to receive referral fees. The client self-transacts, the adviser educates. Advice is generic about specific or generic products, akin to answering exam questions. Information is factual, opinions are absent. Conflicted interests are avoided.
The Product Paradigm
At the turn of the century we witnessed the demise of home service, with the disappearance of insurance company representatives, which at its height numbered 400,000 agents. A decade later and we witnessed the disappearance of tens of thousands of bancassurance advisers. Now, we are witnessing the disappearance of boutique independents, as we have little over 25,000 regulated individuals hanging on to increasingly burdensome and costly practices, with half set to retire in the next decade. That is almost 95% of the supply chain for financial intermediating, gone in a few decades.
And, 95% of the population left underserved, holding less than threshold level investable assets facing a global economic and social emergency.
Transparency had proven a strong disinfectant, as evidence emerged that the hidden cost of intermediation far outweighed the benefits, as the late Jack Bogle, liked to say, “nobody knows nothing”.
Armies of ex-FI’s left high and dry. Populations of disintermediated, abandoned. The end of a paradigm.
What was wrong with it all?
What mattered least to the bankers mattered most to their clients. What mattered more to unaccountable hierarchies was value extraction, perpetrated by the supposition of the FI planning model.
“Accumulate for the best part of 50 years on the bet you can buy freedom in the last 16.”
Everything was measured by a price tag. The pension pots. The sum assured. The critical yield. Nothing else mattered.
Exhaustive for the client. Often destructive, where planning stages were missed. Selling product. Mis selling products. Treating the money as the client, and not the customer.
Let me introduce a new paradigm.
Non-Intermediating Financial Planning.
Treat the client as the customer, and not the money.
Plan the client first, then put in place the financial architecture to support them.
Here there is a productive planning cycle, of repeated mini cycles of succession, decumulation, crystallisation, preservation, and accumulation … as the client lives a life well lived. And, creates a meaningful life and something bigger than themselves.
The opposite to the exhaustive cycles proffered by the parasitic wealth extraction industry.
There is a focus on exposing the highway robbers and creating wealth in every area of the client’s life: mental, physical, emotional, spiritual, and financial.
Here, plans are sold, not products.
What if, there was a wall between advice and product?
“If you don’t have a plan, you become part of someone else’s.” – Terence Kemp McKenna
Here we can employ the armies of ex-FIs to serve the populations of disintermediated with an NIFP model, that’s very different …
Instead of feeling stuck in a rut … this model delivers the client from suffering to wisdom, to security, to freedom, to a lasting legacy.
This new paradigm requires a new way of thinking. A new way.
It can be delivered online.
It can be delivered from anywhere to anywhere. From any point in the global village to any other.
Here’s the thing …
If you plan the money before you plan the client the process is exhaustive for the client … it diminishes the life of the client to a number.
If you miss out planning the money … or miss out planning the life … the outcome is destructive for the client.
If the plan is someone else’s … that’s just highway robbery.
If you plan the client’s life before you plan the money the result is productive.
This is the productive cycle from creation to manifestation, I call the GAME Plan.
NIFP is the reverse of the FI.
That’s why you can’t just lift and drop FP into a Non-Reg FP business.
That’s why you should join our Adviser Network, instead of just setting up another company to do the FP work.
The Academy of Life Planning is a Global Online Non-Intermediating Financial Planning Network, we provide professional help and support for our global community of life & money planners serving a native and/or expat clientele across UK, Europe, Asia, and USA.