{"id":370,"date":"2016-09-26T08:24:55","date_gmt":"2016-09-26T07:24:55","guid":{"rendered":"https:\/\/arkenstonewealth.co.uk\/?p=370"},"modified":"2016-09-26T08:24:55","modified_gmt":"2016-09-26T07:24:55","slug":"financial-advice-dont-bank-on-it","status":"publish","type":"post","link":"https:\/\/www.arkenstonewealth.co.uk\/blog\/financial-advice-dont-bank-on-it\/","title":{"rendered":"Financial advice? Don’t Bank on it…"},"content":{"rendered":"

Several of my clients have recently expressed dismay to me about the closure of their local HSBC branches in and around London.<\/p>\n

Bank closures are of course nothing new, but I admit to feeling a tinge of sadness upon hearing this news. I was based in these particular branches for a number of years and have some fond memories of the people I worked with and the clients I served. My wife and I first met in a bank too, so branches are very dear to my heart!<\/p>\n

We\u2019ve seen a fifth of UK bank branches disappear in the last five years alone and this trend shows no sign of stopping. The rise of digital banking has played a part, but this has and will continue to have a knock-on effect for the many people who prefer to deal with their financial affairs on a face-to-face basis.<\/p>\n

None more so than those seeking\u00a0financial advice.<\/strong><\/p>\n

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Easier Times?<\/strong><\/p>\n

There was a time in the not too distant past when your local bank branch was the first port of call –\u00a0not just for payments and transactions –\u00a0but also for financial advice: buying a home, planning for retirement, investing savings and even arranging wills and trusts.<\/p>\n

Regulatory and commercial pressures have seen many banks remove regulated financial advice services from their branches. To make matters worse,\u00a0banks that do still provide advice seem to constantly change or limit their services in some way –\u00a0usually\u00a0to achieve operational efficiency for the business itself, not its clients.<\/p>\n

In MY\u00a0day….<\/strong><\/p>\n

During my 12-year stint as a financial adviser in a bank, another common and very frustrating trend for clients was the transient nature of the workforce. Regular internal restructuring means\u00a0advisers and relationship managers rarely tend to work in the same branch\/area for more than a year or two. It takes time for clients and advisers to establish a rapport and trust with one another, so being passed from pillar to post can be very unsettling.<\/p>\n

It’s encouraging to see some newer entrants to the banking sector challenging the old guard and going back to service basics and developing relationships with their customers. Metro Bank, for instance, are one of the big success stories but even they\u2019ve chosen not to offer regulated financial advice, which doesn\u2019t help those who would usually seek advice from a bank.<\/p>\n

So with the shrinking branch network, non-existent\/inconsistent\u00a0services and a transient bank\u00a0workforce, where do newer investors or even disillusioned bank clients go for advice?<\/p>\n

1. Shop around the banks<\/strong><\/p>\n

Several banks still provide regulated financial advice and upon closer inspection of their services,\u00a0you may find these fall\u00a0under what\u2019s referred to as\u00a0Restricted<\/strong>\u00a0advice<\/strong>(as opposed to Independent). This term causes a bit of confusion, but basically\u00a0means the bank have chosen to offer clients\u00a0their own or a limited range of product\/fund solutions from the wider market.<\/p>\n

Restricted advice can also mean they choose not to provide advice in all financial need areas e.g. offering investment advice but perhaps not pensions or Inheritance Tax solutions.<\/p>\n

There\u2019s nothing wrong with this model in principle; that is provided their service offering meets the needs of their client base and they aren\u2019t shoehorning their clients into unsuitable products or failing to address wider financial needs.<\/p>\n

Depending on which bank you approach there may be a minimum amount you\u2019re expected to invest (typically \u00a350,000). If you\u2019re thinking of taking financial advice from your bank, go in with your eyes open and expect the staff and service goalposts to move on a regular basis.<\/p>\n

Please note\u00a0some banks do offer independent financial advice.<\/p>\n

2. Embrace technology\u00a0<\/strong><\/p>\n

Developments in financial services technology are creating alternative channels to help deliver advice and even empower people to make decisions\u00a0without<\/strong>\u00a0advice.<\/p>\n

It\u2019s been possible to access financial advice remotely (e-mail, telephone and Skype) for some time now. Advisers take clients through the advice process via an agreed method of contact and employ online tools and questionnaires in real-time. This has some advantages, particularly time and travel savings to both parties.<\/p>\n

An extension of this is what\u2019s been coined\u00a0Robo-Advice.\u00a0<\/strong>\u00a0This is still very much in its infancy but at its heart is an online wealth management service that provides automated, algorithm-based portfolio advice with little or no human intervention. Taking financial advice from a computer sounds like something out of a Philip K. Dick novel but it’s\u00a0assumed\u00a0<\/strong>this will\u00a0particularly appeal to millennials and future generations of client.<\/p>\n

These technology-dependent approaches will almost certainly gain further traction in future and should go some way\u00a0in helping\u00a0to plug the advice gap. In my view,\u00a0it\u2019s unlikely they’ll completely replace the traditional face-to-face\u00a0advice service \u2013 the\u00a0personal touch can be very important to those making big life decisions<\/p>\n

3. DIY<\/strong><\/p>\n

For\u00a0more confident and active investors, several banks and fund managers offer online investment platforms allowing investors to pick and choose from the\u00a0thousands of funds available in the retail investment market. Platforms come with a range of tools to educate investors on the risks and help them select suitable options.<\/p>\n

I\u2019ve used many platforms in my time and these are a very slick and efficient way of investing money in funds and shares. The obvious point here however is that the decisions are entirely your own and as with anything you choose to do without professional guidance, errors of judgment can be costly.<\/p>\n

4. Independent financial advice (IFA)<\/strong><\/p>\n

An IFA has access to the entire fund\/product marketplace and therefore able to select the most suitable solutions for a client. Alongside this, they may offer additional services and advice to complement and further bespoke the core investment management. These services typically include:<\/p>\n