Having a financial planner by your side is an incredible asset. It can give you freedom, choice, security and confidence. It can open new doors, create new beginnings and remove stress.
But unfortunately, it’s a luxury for the few. Not everyone can afford personal financial advice, but that doesn’t mean there aren’t people who need it. So what happens to them?
This has become an age-old dilemma for the industry, one that doesn’t appear to have any simple solutions. As a result, there's a massive ‘advice gap’ in the UK, where almost 90% of the population aren’t in a position where they can receive professional financial advice. And the gap is widening.
Like a splinter in my mind, I’ve pondered how we can rectify this problem. Personally, I’d love to be able to open our doors to people needing financial advice but who can’t afford it. But how?
Barnaby Cecil is and will remain a family-orientated business whose attention is devoted to a limited client base. But that doesn’t mean to say that we can’t take on a few more clients… which leads me to reveal some exciting news.
We’re proud to welcome two new members to the Barnaby Cecil community, who work for a charity. Much to my delight, I’ve created a model that’s enabled me to take these clients on, and a handful of others like them.
Opening our doors to the Salvation Army
If you didn’t already know, the Salvation Army is a Christian church and charity, whose employees, volunteers and members dedicate their lives to working for the organisation and improving society by supporting the vulnerable and disadvantaged.
I live locally with a couple who are employees, which has meant I’ve naturally got to know a lot more about the organisation and the incredible work they do. Being a financial planner, we inevitably ended up talking a little bit about money through no fault of my own (I promise!).
Anyway, as you’d expect, employees of the Salvation Army aren’t awarded high salaries. They receive a basic salary to cover the cost of living and a home is provided in the form of officer’s quarters. In lieu of a formal pension, the Salvation Army rewards lifetime devotees with suitable retirement properties on their behalf.
Although benevolent, this gesture creates a lot of financial complexity when it comes to retirement planning.
The most pertinent problem is this: what happens if you dedicate most of your life to the Salvation Army but fall out of faith with the organisation? How are you able to secure a pension if you leave the organisation close to retirement?
This retirement scheme has created a scenario where employees don’t really have a choice but to remain committed to the firm. As it turns out, the Salvation Army are well aware of this caveat and are interested in rectifying it. But there isn’t a clear solution to the problem.
It pains me to know that there’s a colossal segment of the population who will never be lucky enough to benefit from personal financial advice. These people will have nobody to talk to about financial goal setting, nobody to turn to at times of economic volatility, stress and uncertainty. And most concerningly, they have absolutely nobody to help them secure a strong enough pension to live off during retirement.
Although there are now plenty of more affordable digital alternatives to advice, these are only helpful to people with straightforward circumstances. How could an app ever hope to create a retirement plan for someone in the situation described above?
Creating a system that benefits all our clients
Being a small and exclusive team has both strengths and weaknesses. One of our weaknesses is that we can't help everyone, and we have always said our ceiling will be 75 families.
As we enter year three, we’re going to turn that structure around and still focus on the top 10% of the wealth planning market, but commit 10% of our fee time to the bottom 10% of the advice market – those who are traditionally ‘priced out’ of high-quality financial planning.
That way we’re able to help others, both as a business, and as a community. Particularly those, like the couple mentioned here, who have a very unusual, complex and unique retirement scheme.
There will be others who are in the same predicament, and we can help up to 8 more of these people or families in the same way.
So if you know of anyone who is in need of our service but unlikely to be able to afford the usual fees, please let them know our name. We hope that this might inspire other planners in the profession to adapt their models similarly, so that more people can benefit from personal financial advice, even if they can’t afford it.