AS we ease out of a long, difficult lockdown and businesses begin to re-open, the importance of smart money management comes into focus. Now more than ever, clients are conscious of protecting and growing hard-earned profits and finding smarter ways to invest and manage their finances.
In many ways, the financial sector is undergoing a step-change. Traditional banks are being challenged on many fronts; as they become squeezed on both the commercial and retail sides, funding for both business and property development is moving increasingly to the private sector.
As deposits in traditional banks lose savers money (and soon to cost money) retail customers are switching to online, low-margin banking options like Revolt and N26. As a result, retail banks are moving into wealth management – just look at Bank of Ireland’s interest in Davy’s and similarly AIB’s purchase of Goodbody’s.
Bank of Ireland’s ownership of New Ireland and AIB’s tied-agent relationship with Irish Life. All of these are further example of market consolidation and a reduction in independence across the sector.
There is a common thread running through all these different trends; “Trust”. The recent Davy and Dolphin Trust scandals as well as the various Bitcoin scams will have done little to bolster an already fragile public faith.
All of this reiterates the value of independent, objective wealth management advice. Opaque commission structures are overly complicated to hide the real benefactors of such arrangements – and its rarely the client.
But I believe that the days of obscure commissions are numbered. The future is a fee-based, holistic model of wealth management and financial planning that delivers much more to the customer than the traditional model of commission-heavy financial products.
There are many examples where we have saved a client money, for example, we recently advised a client on how to make changes to their investment portfolio that will save over €5,000 annually. Similarly, we helped another client save in excess of €20,000 over the term of their protection policies such as life, specified illness, mortgage, and income protection policies. These may seem extraordinary cases but sadly, they are very common.
While a lot is in flux within the sector, some things remain unchanged, such as the value of a personal approach to financial planning. Each of us have different situations, means, and goals; to really add value to a client’s financial planning we need to know and understand their individual story.
Clients recognise the value of this - there is a trend emerging in the UK and Ireland whereby clients are moving from large wealth management firms and choosing instead bespoke, personal services like Investwise Financial Planning, with a strong team of professionals.
They are more likely to have a trusted and long-standing relationship with their advisor as opposed to him or her being transferred regularly within the larger Banking or Wealth Management firms and the relationship breaking down or ceasing altogether. These trusted relationships are hugely important as it allows the client and the advisor to work closely together to achieve the client’s goals.
The pandemic has taught many hard lessons. We know that the rainy days do indeed come and we need to be prepared for them. But we also know that brighter days will follow close behind. Financial independence, and knowing how much is enough, help us to really embrace the here and now.
One of Ireland’s few fee-based, privately-owned financial advice firms, Investwise Financial Planning offers expertise in financial planning, wealth management, pensions, and investments for individuals and business owners.
By operating a transparent fee structure instead of product commissions advice is impartial and in the best interests of the client. Established in 1988, Investwise Financial Planning advises 300 clients with funds under management (FUM) value of €140million.
The team of six advises a diverse range of clients including retirees, self-employed individuals, company directors, and senior management.
Liam O’Riordan is Head of Investwise Financial Planning, Cork.