IFAs, Dodos Or Growgrows?

Print This PageSend to friend

According to Liberal Democrat Treasury spokesman Lord Newby, IFAs are a “doomed species” which will suffer at the hands of an increase in demand for free, electronically delivered advice. He went on to say “I do not think they would want to go through the appalling business of laying out all their details and taking an hour to go through everything the way we did when we were buying financial services products. I hope people do take financial advice but they will want it free and they will want it delivered electronically.”

So was the Lord Newby right or is there still a future for IFAs?

Well, as with any other species, IFAs are only doomed if they fail to evolve to meet the new realities of the environment in which they exist. Just as in the jungle, environments are shaped by a number of largely irresistible forces such as:

• Predators – The forces out there which are actively making survival harder such as the new distribution mechanisms that are taking market share at the ‘simpler’ product end.
• Climatic – Forces which influence the environment in which we operate and over which we have relatively little control such as the advent of RDR and the impact on different charging structures.
• Food supply – Anything which influences the size of the potential income stream from both current and future clients such as the changing nature of consumer demand in the digital information age.

Extending the evolutionary metaphor, the IFA species will survive if its DNA adapts to the irresistible changes happening within its environment. In this regard, two approaches seem to be emerging:

• An increasing number of IFAs are accepting the environmental change and indeed embracing it. For example, a number are using innovative approaches to harness the power of the web, such as the excellent Meaningful Money and BrilliantWithAdvice sites.
• Meanwhile, a depressingly large number of planners and advisers seem to believe that rather than evolving, the answer lies in the futile endeavour of trying to resist environmental change. I fear that is the equivalent of bleating while the water hole dries up!

Perhaps a quote from Charles Darwin might provide food for thought on this subject. “It is not the strongest of the species that survive, nor the most intelligent, but the one that is most responsive to change”.