John Millican, Chairman
Posted in Financial Advice on 04.07.14

“The quality of advice is not strained, it droppeth as the gentle rain from heaven upon the place beneath: it is twice blest, it blesseth him that gives and him that takes.”

Profound apologies to William Shakespeare for the misuse of his lines from The Merchant of Venice. What is, or rather what are the qualities of advice? Indeed, what is advice? That quest is prompted by the subsequent debate following the Chancellor’s announcement in his recent Budget Statement, that pension policyholders will be free to spend their funds as they wish. He added they would receive advice, subsequently and quickly changed to guidance, to help them through the decision process.

I consulted my dictionary, which says that guidance can be advice or counselling, and advice is an opinion or recommendation offered as a guide to action. So that cleared up the confusion! Actually, it took me back to the age old issue of identity crisis for advisers, what do we do. Then I saw Tony Wickenden’s excellent article in Money Marketing this week in which he unashamedly admitted plagiarism, which makes it easy for me to do the same(read the original article here). The question he posed was more challenging: what is the proven way for advisers to add value? Answer: doing difficult work that no one else wants to do.

In practice, “reporting and interpreting hard stuff, keeping up to date with the high value stuff and providing answers to hard questions”. He went on to say that clients will only value and pay for service and advice that meets the “Three Cs test”, which are:

  • The challenge is Complex;
  • The Consequences of “getting it wrong” are detrimental;
  • The challenge Cannot be “self served”.

This was said particularly in the context of advice on taxation matters, but of course there are many other topics that fall within the Complex definition. In reality of course, it is in the stitching together of all the elements of financial advice into a personal financial plan that the seemingly straight forward issues become complex. That is where value can be added. Whether by advice or guidance.

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John Millican, Chairman
Posted in Financial Advice on 04.07.14