I felt compelled to write this short blog, due to some recent media and press comments regarding investing your hard earned money and the apparent safe way of doing such a thing and the consequences that these type of comments generate from non financial advisers/commentators’ intended or not, is far reaching, way more than they could ever imagine.
My answer to the title of this article is “Because we can”
Independent Financial Advisers (IFA’s) are authorised by the Financial Services Authority (FSA) to provide regulated financial advice and as such are 100% accountable for everything they say and do-even on social media! Every piece of advice has to be justified and documented. Even when there is a need to provide advice that is not ‘regulated’ by the FSA, a well run company, will treat this advice the same and still provide a full justification and report. Although there is very little unregulated advice today, as an FSA regulated business you are expected to conduct yourself in an accountable manner and still follow certain guidelines and codes of conduct and rightly so.
That brings me on to the consequences unintended or not, of the comments of so called financial journalists/media type, who like to give advice and I don’t mean the type who educate and inform via impartial and unbiased websites or blogs, which give a rounded, and informed experienced argument to any particular issue.
I am referring to the type that are totally unaccountable for their ‘advice’ to the masses, and who remind me of the News of the World paper-‘they may of had a large following and readership, but it didn’t stop them printing and spouting complete and utter nonsense on a regular basis’ and look what happened to that medium!
This type of unaccountable journalistic adviser does not have to document or justify anything they have to say and are like Teflon when it comes to any comeback, nothing sticks! They can say what they like. If someone follows their advice and as result either losses out financially, or make a decision, which turns out be very detrimental, can they complain and say it was that money person off the telly or that guy or woman off Twitter or Facebook, no they cant, they have no re-dress at all, NIL, and then they blame the financial services profession, of which we are a fully paid up member!
Compare that with the advice an IFA gives:
Before any advice a Financial Adviser will obtain a full and rounded view of the clients personal and financial circumstances, including details of all assets; liabilities, income and expenditure, along with their goals, dreams and plans for the future and their attitude to money and risk.
Even if the advice is to put all your monies into the Bank or Building Society or National Savings, or give it to Aunty Joan! An IFA will justify and document that advice.
Of course there is no such thing as a free lunch, unless of course you want to run the risk of an upset constitution. An IFA will charge you for their advice where-as the person on the TV sofa or Facebook/Twitter won’t!
But the IFA’s advice comes complete with a full and impartial justification and documented reports, does this reduce the possibility of unsuitable being given-YES, although history shows it doesn’t eliminate it completely, but I will tell you something for free!, it certainly comes with full redress if it does prove unsuitable. Can the same be said about the media personality adviser!
This week we have had an elderly client close a bank deposit account, which we had previously advised on, which had in excess of £30,000 in and now, intends to put that money in a sock hidden in their house!
All because one of these unaccountable media/ financial commentators said they should!
No amount of trying to reassure our client that their money was indeed ‘safe’ in cash in the bank would deter the client from their decision, even giving up the 3.0% Gross interest rate-and they are they are non taxpayers! Would not deter them. All because of the fear they now feel, instilled into them by the armchair journalist who said this was good advice, because the banks can’t be trusted.
Our client now closes their deposit account, puts it in a sock under the bed, open to the effects of burglary, loss, an extra trip to the shops, for which this money was not intended! and when it’s all gone, earlier than expected, of course they are free to spend their own money.. Who do they blame the financial journalist type? No… The financial services profession and the banks.
The financial journalist Carry’s on spouting nonsense to their many followers and the whole process repeats itself, at a time when the country needs people to save for education, retirement, old age and care etc.
Just be careful who you take your advice from!