More than ever Independent Financial Advisers (IFAs) are having to justify their value, MiFID disclosure requirements and ever-growing press scrutiny are pushing the need for advisers to show what they do and why they are worth it. In the long run, getting the right outcome for the client will be the IFA’s focus – there are many ways they can show how they are adding value through the clients’ financial journeys.
With a long-term plan, it is the IFA’s job to guide clients to solutions that aim to fulfil their objectives and give them confidence in their futures. By assessing the clients’ risk profiles and financial goals, IFAs can help clients navigate risk and identify opportunities to build a clear plan that will help meet the clients’ future needs.
Keeping the clients’ investments on track is a key foundation of providing good outcomes. Once IFAs have established clients’ risk profiles, they align the risk of portfolios to make sure they are in tune and stay on track over the months and years.
Cash flow modelling can be a powerful but simple tool to illustrate to clients projected returns, costs, inflation, and their income needs in the future. Seeing a picture of future “money in and out” can really put into perspective how the clients’ plans are progressing and what changes are needed.
IFAs can help clients to avoid common mistakes, guiding them through times of fluctuating markets and help them to make the right decisions. Perhaps selecting a cost effective, efficient and reliable platform will add value and make portfolio management and tax planning easier – meeting the clients’ needs and making their financial lives simpler.
Tax can really erode savings and investments so checking that all applicable tax reliefs and allowances are used each year can really boost savings and investments resulting in the clients’ money growing faster. There are many “tax traps” and complex allowances that advisers understand and can help clients to navigate.
Risk modelling / profiling tools can be used to help to maximise the clients’ returns for a given level of risk / risk tolerance, reducing portfolio risk for a required return or maximising return for a given risk.
Managing the clients’ retirement income, for example coaching clients through the options like Pensions Freedoms and avoiding sequence of return risk, could add many years of income from their portfolios.
Having understood the clients’ objectives, IFAs can be alert to opportunities, being the clients’ eyes and ears in ever-changing tax, legal and product markets – new products, new tax freedoms, better strategies.
Today’s portfolios are very different to ones ten years ago and ten years before that – IFAs keep up to date with developments and lower cost solutions therefore keeping their clients’ portfolios up to date. Reducing costs and boosting efficiency can compound–up to big differences over the years.
IFAs scour the market to find good value. Life assurance, pension products, wrap platforms and investment products have all seen price pressure in the last few years. Advisers can potentially save costs which, when combined with good tax planning, can really boost clients’ returns.
As well as getting good value for clients, an IFA can increase the amount of client portfolios protected under the Financial Services Compensation Scheme (FSCS). They can also provide rigorous due diligence on all investments – giving clients peace of mind.
At the end of the day, maybe one of the most valuable aspects of having an IFA is that the adviser can be there when the client needs them most. During stressful times like divorce, death, business transition or investment market volatility, giving clients confidence that their wishes are met, their loved ones protected, and / or their business is secured and even that the paperwork is under control!