Why YOU should not be the one paying for your Adviser’s retirement.

What is proper financial planning, and what is it that clients value most if they engage a Financial Adviser?

Primarily, it is about the relationship with your Adviser built up over many years. It’s about clients trusting the Adviser, and the adviser understanding the clients’ values, goals and family. I have clients where I recall their children being born and now, they are at university, or where their children are now clients because of trust funds set up by grandparents. It is

a privilege and source of great satisfaction to be with clients and their families on that journey through life.

Unfortunately, the financial planning landscape is changing. As many advisers reach retirement age, they are selling their clients (including the trust and relationships built up) for multiples of the annual fee income and heading off into retirement. Private Equity firms, among others, are funding large firms of Financial Advisers known as “consolidators”.

The goal of Private Equity firms is to recoup their “investment” as soon as possible, others might take a slightly longer-term view.

How does a “consolidator” make back on their investment? It often includes moving portfolios onto platforms, and into investments where they have a financial interest in both the platform and the underlying investment funds (hardly ind

ependent financial advice). Also, they will strive to cut costs and provide the “financial advice” as cost efficiently as possible, potentially with little time for relationship building or understanding clients’ values. Effectively the whole relationship and dynamic has been destroyed, to fund the original adviser’s retirement.

The good news is that not the whole industry is like that described above. Many advisers spend much time and effort finding the right home (continuity) for their clients, where they are comfortable that the relationship and same level of understanding and service can continue. Others are spending the time to ensure that their firm is multi-gene

rational in terms of advisers and staff, so that the service to clients can continue long beyond the retirement of the founding advisers.

Often clients engaging a new Financial Adviser, focus on services and fees, the glossiness of the marketing material, or the size of the firm. These are certainly worth consideration, but perhaps more important is asking about the firm’s values and how its shareholders are going to exit the business at some point in future. What steps are they taking now, to ensure that the firm are still looking after you and your family in 30-40 years’ time?

Bluecoat is currently able to take on a limited number of clients, who find themselves having been “sold” to a new firm, but who long for a more traditional long-term financial planning relationship (with a multi-generational Chartered Financial Planning firm). If that is something that you value, we would love to speak with you.

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