Top 3 reasons for not becoming an advice-only financial planner

Three objections to becoming an advice-only financial planner.

1. It’s illegal.

2. I’ll never make any money at it.

3. I’m not ready.

It’s Illegal

The same principles apply to most, though not all, markets. Let me use markets that follow UK financial conduct regulation as an example. 

It’s not illegal!

The UK FCA rulebook contains a section referred to as the Perimeter Guidance (PERG). This rulebook describes in detail what is and what isn’t in the remit of the FCA. It defines the perimeter. Here is where you discover that financial planning is not a regulated activity or that the investment must be a particular investment (8.26).

I get it. 

It’s hard to believe there is a perimeter, having spent your entire working life as an FCA-regulated adviser. Like Trueman Burbank, played by Jim Carrey in the Trueman Show, Christof (in this case, the FCA) controls every aspect of your life, including the weather. 

Christof manufactures scenarios that dissuade Truman’s desire for exploration, such as the “death” of his father in a sea storm to instil aquaphobia and by constantly broadcasting and printing messages of the dangers of travelling and the virtues of staying home.

Here’s the thing.

Over 70 professional bodies and trade organisations oversee financial service professionals’ conduct in the UK. Governance is a patchwork quilt of regulation. The FCA governs one square, the conduct of distributors and manufacturers of particular investments.

It’s the Seahaven!

It would be a good thing for Christof to reveal the truth. Instead, Christof discovers Truman sailing away from Seahaven on a small boat, having conquered his fear of water. Christof speaks directly to Truman through a speaker system and tries to persuade him to stay, claiming that there is no more truth in the real world than in his artificial one, where he would have nothing to fear.

Those of you who take the time to become familiar with PERG.

Here’s another thing.

You are just actors who highlight the product placements that generate revenue for the show.

Truman gets to say his catchphrase: “In case I don’t see you… good afternoon, good evening, and good night”, bows to his audience and exits.

I’ll never make any money at it.

Look, those of you who think it’s OK for clients to pay £15,000 for a cup of coffee and a chocolate cake. I agree; that’s never going to happen in the outside world.

You say:

“If it’s a £1.5m portfolio, it could be the best £15k he’s ever spent.”

I hear you. Enjoy Consumer Duty in 2023!

For those of you with an itch of conscience, plan-based revenues do not make an empty business model.

The best advice-only financial planners can command up to £500/ hourly fee.

Revenues can be recurring, as Michael Clinton says in Roar into the second half of your life (Before It’s Too Late):

“The idea of a favourite future should be with you for your entire life, a never-ending conversation with yourself.”

We have plenty of examples of successful plan-based revenue firms making a success of it.

But here’s my most significant point …

Because generic advice is general, it can be delivered to a room of people. It’s scalable. If you have funds to invest, could you invest them here?

Twenty-five thousand advisers can only serve 5% of the population on a one-to-one basis.

Please give them the tools and the info to financially activate them … stop creating excessive dependency in client-advisor relationships out of fear of losing AUM. It’s unhealthy.

Please have a look at my financial activation scorecard if you want to increase client activation levels in your client base and begin to close the advice gap.

The Financial Activation Scorecard (scoreapp.com)

I’m not ready!

When you move to another country, do you learn the language and culture after or before you get there?

Would anyone object if you took Spanish lessons?

Would anyone object if you took on a side hustle where you could practice Spanish?

If your boss thought it was illegal, maybe they would object.

Since last week, exclusivity clauses in zero-hours contracts and low-paid workers under other contracts aren’t legally binding. 

One of the skills we train advice-only financial planners to do is plan income-producing side hustles to grow wealth and plug cash flow deficits. The “exclusion” regulations aim to widen the pool of available workers, especially in industries with a shortage of workers, such as hospitality and retail. Not only will it help drive economic recovery, but it will also help low-paid workers increase their income by giving them the freedom to apply their skills to multiple industries simultaneously.

For those investment advisers bound by exclusion clauses preventing them from doing financial planning side-hustles. Go to night school, learn Spanish. Invest in your Future Self.

The more you invest, the more you exponentially compound your future self.

As billionaire entrepreneur Peter Theil says:

“If you’re planning to do something with your life, if you have a 10-year plan of how to get there, you should ask: why can’t you do this in 6 months.”

If you want to become an advice-only financial planner for 2023, contact me at steve.conley@aolp.co.uk.

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