Much more than an IFA

28th June 2017

The following excerpts are from an article which was recently written by the editor of our local village newsletter; they remind us how IFAs are generally perceived and how different we are from that perception.

“In the past I have interviewed a number of companies and individuals who have businesses that are either centred or close to Greens Norton. What has struck me about all the businesses is that they have a large amount of innovation associated with them: either in terms of what they sell or make or in terms of how they organise themselves.

Fortitude are a financial company based just outside Greens Norton; they offer financial advice. You, perhaps, would not think that such a company would have much of an innovative focus. I found that this was not true.

I spoke to two of their planners: Chris Bowmer and Richard Peters. In my early life I was brought up in an environment where the two things that were not talked about were sex and money. However, the last twenty years has seen a veritable explosion in both, with tabloids focussing on the former and the broadsheets on the latter. Almost the first remark that Chris made when I arrived was to refer to the blizzard of financial advice that is found in the media as ‘financial porn’.

I imagined that a visit to a financial advice company would mainly concentrate on maximising investments and future income. Both Chris and Richard quickly disavowed me of this notion. They did say that there were companies where this happened, but they preferred to focus on the aspirations, future lifestyles and career wishes of their clients before thinking of money.

They told me that when they take on a new client they adopt a three-stage process. The first is to ask the client what they want to get from the rest of their life such as: do they want to retire early, do they want to take part-time work, if they are retiring early what do they see their retirement looking like?

Once they have established this, they start looking at the prioritising of financial objectives that match the answers that they received in the first part of the process. The third part is the one that I guess most of us associate with a financial advice company: the selection of financial instruments that enable their client to successfully live the life they have articulated. This is the conventional part of their process.

What struck me about the processes that they use is that it involves both hard and soft skills. The latter involving discussing and probing the aspirations of their clients, with the former doing the exact financial planning that matches these aspirations. I pointed out that this must be difficult to do: during my career I have come across a number of people who have excellent hard skills but whose soft skills lack something. They agreed with me and pointed out that there is a major shortage of industry staff who have the Certified Financial Planner (CFPTM) qualification to carry out the processes they described.

The model they adopt when dealing with a client is called the “financial bucket” model, where the bucket holds assets such as: bank accounts, savings accounts, investment bonds and shares and where the bucket empties through expenditure on items such as food, mortgages and rents and fills through inputs such as salaries and wages and interest from investments. The bucket is also used to support the client’s life choices such as: holidays, giving to charities and carrying out volunteering work.

During a client’s life the inputs and outputs into the buckets change, for example downsizing a house may mean that a client has monies to place in the bucket, either as a liquid asset or as an income generator. The important point that Chris and Richard made to me was that the flows change throughout your life, for example when your children leave home and you are close to retirement your life choices change and hence your financial requirements change. This is why they do not have one-off meetings with their clients.

The world is full of surprises. In my past work I have met many people, interacted with lots of organisations and visited many places. A few of the people that I have met have been, at first sight, extraordinary; however, many of the people I have met once I have got to know them have been extraordinary and out of the normal. Fortitude is the company in the second category: a company that at first sight provides straight financial advice but when you probe you find that their work is very much more than that.”

Darrel Ince

Editor, Greens Norton News