This came to me one day as I was recalling a holiday, and arriving at the destination airport.
In some places, the concierge meet you at the airport working on your behalf, making you feel important, at ease, as if they care – OK, you may well have paid a little more for this service, but you feel comfortable that all of your luggage is being taken care of. Those precious items, expensive perfume, gifts, expensive cases, what-ever, are being treated with care. You will get to your destination, with the minimum of discomfort because everything is in line with your expectations and aims. Admittedly, not many of us plan to have items smashed or broken in our luggage, but often it is not unexpected. When we arrive at the hotel, the bags are taken our room, so that we can focus on enjoying a much looked forward to spell of relaxation and enjoyment, without the worry, or labour, of dealing with the luggage. Magically, it all arrives in perfect working order, and we go about the business of the holiday – the whole thing we have been focussing on.
We do it on a budget, saving ourselves a few quid to do it ourselves, or see what happens when we get there
Have you ever arrived at an airport, where some very enthusiastic chap grabs your bags, bundles them up, and takes them quickly to the transit coach – then to stand with his hand out waiting to be paid for what now feels like an obligatory service? Keen to move on to the next traveller, once paid, your luggage gets even more enthusiastically ‘loaded’ - or more commonly known as thrown – into the back of the transport, heaped on top of, and jammed in by the closing door. That’s the last you see of him – on he goes, repeating the job, time after time, earning his money.
Then, you arrive at your destination, deal with your own luggage, haul it off to your room, open it, to find your clothes all smell beautiful – drenched in perfume or aftershave, although a little harsh to the touch (due to the shards of broken glass embedded in them), and for the next few hours, you spend your time, not sipping a Pina Colada by the pool, but by washing your clothes, and trying to find out what is missing, broken or generally trashed.
Now, I am for one minute not criticising baggage handlers, it’s simply to show that you get what you pay for (most of the time). In the first example, you feel at ease, your holiday has begun, free of hassle, and you feel special and cared for. You have paid the Concierge to look after you, and that is what they do. In the second example, who, is the handler really working for ? Himself of course! He steamrollers you into an obligatory agreement – after all – he has just walked off with your bags, then charges you to (not quite, but almost) get them back. You feel obliged to pay! Once paid, off he goes, into the sunset, and you won’t see him again – irrespective of the consequences or state of the luggage.
Check back to the title of this article now, and I am sure you can see where it is heading as we draw a parallel between baggage handling and Financial Advice…
Traditionally, much financial advice has been operated on the basis of the second example. An adviser comes along (perhaps directly calling you through promises of a ‘free pension review’) gathers all of your financial information and plans together (your luggage), spends a length of time trying to justify why you should move it from here to there, or cash it in and re-invest elsewhere to try to get a better return (and charge a fee – which, incidentally is not much different from commission, in as much as it is payment resulting from a sale). Then, the adviser moves onto the next person, repeating the process. Because the focus is on sales targets and new clients, the after care service is frequently not all that is promised (the banks were great exponents of this approach), and so people come to the end of their plan, not knowing what is going on with the product, what to do, and most importantly, whether it is going to fulfil their aims in life. So now they have the administration headache to sort it all out again, pay more fees, and probably be sold something else.
In the luggage scenario, your baggage (savings and pensions) has been gathered together, for which you have paid for (paid a sales based ‘fee’ ), thrown in the back of the bus (added to the advisers ‘client bank’ possibly not to be properly looked after), then forgotten about. Possibly some damage has been done, but most likely, you are then left with more expense to replace what is damaged, and deal with it all yourself, or buy more clothes (save more to repay charges, or have to engage with other advisers to deal with the policy at the end of the term).
What if we looked at the concierge option though – where you pay a fee for someone to take the time to figure out with you your own priorities in life, and link your finances and plans to that? Once they are clear, recommendations are made to help fulfil those goals and plans, the implementation of which is not conditional on using the adviser you employed. This is true fee only financial planning, where clients employ the adviser to help and guide them, without a direction towards sales.
Of course, if financial products or amendments are needed, then the adviser can help – frequently at a fee less than the market norm. This is the start of a relationship, between adviser and client, where personal and financial plans are reviewed, monitored and adjusted on a regular basis, to ensure that the financial journey through life is as smooth as possible. Because of that, when important issues arise, the relationship is strong, the adviser aware, and the client at ease that recommendations are relevant and appropriate. Moreover, they have the comfort that someone they trust is looking after them, and ensuring that life is as smooth as possible.
Back to the luggage scenario, you have paid for the concierge to collect your luggage, and carefully take it to where you want (building and working through your financial life plan), they deliver it carefully to the right place (putting in place any financial arrangements), ensuring it is properly looked after (the ongoing client / adviser relationship), leaving you free to enjoy your holiday without worry (knowing that your adviser will be there to support you throughout).
The tip list to avoid baggage handling financial advisers is :
1. Find a true Fee Only financial adviser – one who charges a fee for the planning and recommendation, not one who only gets paid upon a sale. There is no such thing as free!
2. Make sure they use cost effective investment portfolios (typically a passive approach) as these can reduce your true annual cost of investing by up to 1.5% a year in some cases.
3. Think about the length of your relationship, and what would happen when they retire – does the firm have other advisers who will take over, and do they all work the same way, or is your adviser young enough to cater for you now, and well into your later years?
4. Do they model your finances into the future, for the rest of your life, and is this done with a professional planning tool?
5. Do they listen to you, take time to appreciate what is really important to you, or do you feel rather hurried (this is usually a good sign as to how they will treat your finances when you are not face to face)?
6. Is this someone you see as part of the rest of your life? That may sound rather deep, but who else do you regularly talk to about your finances and most important plans in life.
7. Would you be happy to recommend them to your closest friends and family? If not, don’t even think about using them yourself.
There are a lot of baggage handlers out there, there are some masquerading as concierge, and there are the genuine ones, who focus on the relationship with their client, not with the client’s money – they are the ones who give you a great start to your holiday, and the rest of your life.
Is this someone you see as part of the rest of your life? That may sound rather deep, but who else do you regularly talk to about your finances and most important plans in life.