The conversation went like this:
“I don’t need financial advice, I haven’t got any money”
“Why?”
“Because I haven’t got any money”
“No, I heard that, but why haven’t you got any money?”
“Well…..”
“Would you like some help in taking control of your financial world so that you can achieve your goals, whatever they might be?”
“I can’t afford goals…”
There is still a feeling out there that financial advice is only for the already rich. Nothing could be further from the truth. You could say that the already rich probably need financial advice less than those who are struggling to take control of their financial future, after all they got rich somehow right?
There are advisers who have minimum investable assets before they consider working with a prospective client. “Go away and come back when you’re rich” is the implied statement here. I have to question whether these advisers are selecting clients only on their ability to pay, rather than those who really need help, and this is to the detriment of our profession. It also brings into question the mechanism by which a client will be charged for advice.
Of course, if an adviser is charging based on a percentage of assets which they “manage” for their clients, the potential clients who have no assets provide no opportunity for the adviser to be paid. The problem with this is that it only reinforces the attitude outlined in the above conversation – that advisers only provide investment advice, and can only do so in an economically viable way when the client has sufficient investment assets to manage. An adviser who charges 1% (or .6% or 1.25%) of assets under advice will receive precisely zero if there are no assets, 1% of zero being zero.
As time goes by, the sources of financial advice become more numerous. A client can ring their industry super fund and get some “financial advice”, but guess what the advice will be centred on – you guessed it, Superannuation and not much else. They can call their tax agent who no doubt will advise on how to minimise their tax (or perhaps the benefits of a Self-Managed Superannuation Fund), or their mortgage broker who will no doubt have advice on their loans (if he doesn’t try to sell them on the benefits of a new one). Some of the newly minted robo-advisers are introducing human advisers to their service offering, but the advice is likely to be centred on investments like many other so-called “financial advisers”. Some of these services also have asset minimums, same/same.
Where does the client go to have someone take a look at the totality of their financial world? There are lots of things a real adviser can do for those who “have no money”. Debt restructuring, cash flow management, risk mitigation, estate planning, wealth accumulation for any reason, goal setting are just a few which spring to mind. Perhaps the most important is establishing a secure framework upon which to build so that over time financial security can be achieved at some point in the future, often years away. Equally important is managing behaviour – standing between the client and them doing something stupid. Or doing nothing.
A “real” adviser is at times a superannuation adviser, tax adviser, investment adviser, insurance adviser, credit adviser as well as being a coach and mentor. (For more on this see here).Whether they have any money or not, I reckon most people need one.
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