Nic Cicutti: How do you make financial planning mainstream?

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One of the stimulating things about the financial services industry is that almost everyone working in it has a business idea – or perhaps a new variant of an existing model – they believe will not only make them a pot of money but help consumers at the same time.

As often as not the plan doesn’t quite come up to scratch. But every now and then it helps define the way the industry operates in a given environment. Along the way, a few individuals stand out as a result of their ability to create and popularise a concept, eventually turning it into a stunning success.

Tom Baigrie is one of those people. Already a successful financial adviser, he effectively barged his way onto the national scene with Lifesearch some 15 years ago.

I still remember the day in 1998 Tom stalked into our newspaper office to tell us about the launch, together with Arthur Davies, of a telephone-based life assurance business which he promised would offer the cheapest life cover of any broker on the market, if necessary by cutting back on the hefty commissions the industry was paying for an advised sale.

Tom’s ebullient personality ensured that in a single visit to Canary Wharf lasting barely half a day he managed to get in to speak to journalists from the Sunday and Daily Telegraph, the Independent and Independent on Sunday, not to mention the Daily Mirror and several other red tops.

That weekend the newly-formed Lifesearch received blanket press coverage. Clearly, the company’s combination of simple but thorough telephone operation coupled with low prices was a definite winner. Of course, it helped a little that, back in the day, Tom looked a little like Tom Selleck from Magnum PI.

What few of us journalists realised back then was that Tom and Arthur still kept their original IFA business, Baigrie Davies, going as well. Fifteen years later, it still is and – as he aptly described himself last week in a Money Marketing column – he is now a “30-year veteran still on the battlefield”.  

That particular phrase is a good one: never mind LifeSearch, for anyone to survive 30 years in this business and continue to make a decent living out of what they do is pretty amazing. Baigrie Davies has been around since the mid-1980s and counts many top advisers in its ranks, including one of my personal favourites, Amanda Davidson.

The real question, however, is whether the Baigrie Davies financial planning “model” is appropriate for everyone else in the industry.

Tom contends that lifetime cash flow forecasts as part of the IFP’s financial planning model are best for clients. Nor does he beat about the bush: “We believe we really know what’s right for people of some means trying to best manage their personal finances.

“I’d add that we also think that those that don’t do it our way achieve far less satisfactory outcomes for their clients, notwithstanding the fact that the latter may love them or their investment returns may be excellent and their service perfect.”

In other words, no matter how good you think you are, if you’re not doing what Baigrie Davies does, you’re not delivering the best possible service to your clients.

Unfortunately, I have a problem with that argument. Yes, it is true that, ideally, a financial planning model – as opposed to what passes for “independent financial advice” but is really a glorified sales operation – is the real “gold star” in terms of helping people manage their finances.

I still remember the sense of amazing clarity when one of my advisers carried out a lifetime cash flow exercise based on my earnings and savings to date and showed me where I was likely to be headed in 15 or 20 years’ time.

But it is not true that this business model applies equally to every consumer. Some of us manage to use similar, if slightly less sophisticated financial planning models all on our own, calling in more expert financial advice as needed to help us make the more important decisions. Others, the more confident ones, are happy to go to execution-only services to achieve their goals.

Could they do better if they took the financial planning route? Maybe, who knows – definitely not Tom, whose certainties in the value of his own proposition appear to echo those of a highly successful Bristol-based execution-only broker, coming at it from a totally different perspective.

My final point concerns the Institute of Financial Planning itself. I hold the IFP in great respect, having first attended one of its conferences in Oxford 20 years ago. But not all of the IFP’s members, a fair number of whom I’ve met over the years, are best of breed, in my opinion at least.

Indeed, I’ve met some whom I would never go to for any form of financial advice. They are pumped up with self-importance, jargonistic and appear to focus more on making the client fit their business model than the other way round.

Perhaps, rather than prescribe specific business models and advice solutions to all IFAs, Tom could focus on ways to extend the financial planning concept to a far wider swathe of the population who might need it but can’t afford it. Now that, like Lifesearch, would be a real revolution.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk