Financial Planning Conference 2017: Focus on the future – day two

Leaders from the financial planning community made their way to the Celtic Manor Resort in Newport, Wales for the CISI’s second Financial Planning Conference on 25–27 September 2017. Here we outline some highlights from the second day 
by Jake Matthews

Dame Kelly Holmes DBE; Sir Steve Webb; Alistair Haig; Mark Gochnour

Read about day one of the Financial Planning Conference 2017Day twoFormer pensions minister Sir Steve Webb, now director of policy and external communications at Royal London, started the day with a talk on the future of pensions in the UK, concluding that “pensions has never been more interesting”. 

Mixing lessons learnt from his years serving the Conservative-Liberal Democrats Coalition Government – “strong and stable, as I like to look at them” – with decades of professional experience at the frontline of pensions, he deduced that the Treasury sees tax relief on pensions as “billions down the back of a sofa”. As a result of this, he made five predictions (see table). 

 Sir Steve Webb's five pension predictions
  1. Webb said it was “pretty likely” that the annual allowance could “go down significantly”.
  2. There’s “that masterpiece of clarity and good tax legislation” – the tapered annual allowance. The £150,000 threshold for reduction will be brought down. The taper, too, could go up from £1 in £2 to £2 in £3.
  3. The lifetime allowance will be cut because it passes what Steve calls 'the Daily Mail test', meaning it won't outrage the average person. He explains: “Most people out there still think £1m is a lot of money. You don’t get that same reaction [from the Daily Mail], that: ‘Don't take that £1m to £900,000!’ I think the Treasury will be looking at it."  
  4. The fourth thing that the Government is looking at is adding National Insurance (NI) onto employer pension contributions. Currently, the rate is 0%. 
  5. Steve's final prediction is that the Government could cut tax-free cash. He said: "It would be incredibly difficult to do retrospectively; and it doesn’t just upset the people who read the Daily Mail, it upsets the people who write the Daily Mail."  

Next up was Dimensional Fund Advisors’ head of adviser services, Mark Gochnour. Using the firm’s research, he discussed the expectations of advisers and their clients, whose greatest fear was not having enough money in retirement. Dimensional’s research from both 2016 and 2017 shows that clients’ most important topic for discussion is their investments; and they primarily measure advisers on the sense of security or peace of mind that they offer.  

The research also finds that the most common thing people look for on an adviser’s website is the phone number. Also, older clients are more likely to visit the website than their younger counterparts.  

Delegate James Beresford MCSI, managing director at Beresford Financial Planning, said Mark’s presentation contained “interesting insights from a marketing perspective, such as how to position your message out to the markets”. 

Double Olympic gold medallist Dame Kelly Holmes DBE concluded the morning’s session with a speech called ‘In it for the long run’, where she drew on her career to talk about achieving long- and short-term goals. 

Financial planning, just like athletics, is all about the fine detail. No one sees this though. Her schedule was written with a four-year endpoint: the Olympic games. As a result, her time was planned yearly, monthly, weekly, daily and even hourly. 

She asked: “How do you get there? You have a team of people behind you, who believe you and want the same outcome as you. You’re reliant on your clients, and they’re reliant on you being the best financial planner. It all works together.” 

Conference delegate Duncan Hannay Robertson CFPTM Chartered MCSI, private client adviser at Cambridge-based Hannay Robertson Financial Planning, said it was a “frank, candid and personal presentation [that] everyone found truly inspiring [and received] a well-deserved standing ovation”.   

James agreed, calling Dame Holmes an “inspiration”. He said: “A lot of businesspeople here are running their race. To see someone who failed but then succeeded is massively encouraging.” 

There were four streams running simultaneously on day two: Practice management; Investments and advance planning; Wealth and investment management (for the first time at the conference); and Real financial planning case studies.

Practice management
Philippa Hann, a partner at national law firm Clarke Willmott, discussed the risks associated with unethical behaviour in small businesses. 

During a debate on how advice is measured, she shared a trio of changes that financial planners can make regarding processes. They are:
1. Look at your processes. Is there anything in them that looks like you’re presenting information in a way that is highlighting the benefits at the detriment of the risks? 
2. Fees: go back and work out if your fees are causing behaviours that you wouldn’t want to happen.
3. You may already do this, but you may not realise how important it is – have your advice peer-reviewed. 

The other practice management topics discussed on day two were: ‘How to work with local and national media’ by Penny Haslam, former BBC journalist; and ‘Let’s forget about marketing!’ by David Scarlett, owner of Soul Millionaire.

Investments and advanced planning
Philippa also headed up another interesting discussion on day two, this time with a panel, about ‘The risks and rewards of robo-advice’ – which was topical given how well Sophia’s talk on day one, in which she explained how she built up a location-independent business through providing ‘eAdvice’ from her laptop, was received. 

Panellist Ian McKenna, director at the Finance & Technology Research Centre, said the only thing to fear about robo-advice is “not engaging with it”.

Fellow panellist Michelle Pearce MCSI, co-founder and chief investment officer at Wealthify, said the discretionary online investment service is targeting a new kind of customer. “It’s the millennials, the new guys, the ones who may only have £5,000 to invest and that no one wants to touch. We want to democratise discretionary wealth management. Is robo-advice a threat to financial advisers? Not really, because it’s a different type of proposition.”  

The panel warned of the consequences that failure to adapt could lead to. Clinton Askew CFPTM Chartered MCSI, director at Citywide Financial Partners, agreed, saying: “You either engage or you don’t; and if you don’t, you may arrive at a situation similar to a cliff edge where your clients are gone, their money has gone and you’re trying to re-engage with young people.” 

Ian added: “Any company that isn’t taking on younger clients is in the process of dying. You need younger people to be the future of your business, unless you’re intending to close the business down when you retire.” 

The panel debate ended with advice on best practice from Michelle: “Take the learnings you like from the ‘robo-players’. It doesn’t have to be technological. It could be things like getting rid of the jargon, using social media more effectively, or speaking to customers on the channels they want to communicate on.”

Bhavick Patel, of Invesco PowerShares (EMEA), found the session interesting and said the panellists were well-informed. He continued: “I think the advisory community is waking up and becoming more curious about robo-advice.” 

Before the robo-advice panel, Julie Lord CFPTM Chartered FCSI had shared her experience of cashflow modelling techniques. And the last topic to be discussed in the ‘investments and advanced planning’ stream for day two was about ‘business protection in an uncertain world’, by Natalie Wright, planner at Mazars.

Wealth and investment management
In a session on ‘Emerging alternative investments: What opportunities are available to investors’, Guy Tolhurst, owner and managing director of alternative investments provider Intelligent Partnership, told delegates that demand for tax-advantaged investments will rise, but that tinkering should be expected. He said that the alternative finance sector, which includes peer-to-peer lending, is maturing and there is government support for it. The Innovative Finance ISA is also a “big opportunity”.  

Other topics discussed were an explanation of the latest asset allocation models and concepts by Edward Smith, head of asset allocation research at Rathbones, and a look at ‘the changing investment research market under MiFID II’ by Alistair Haig (read our article on this topic in The Review: MiFID II and research: what are firms doing now?

Real financial planning case studies
Steps 3–6 of the financial planning process were covered by three different speakers: Warren Shute CFPTM Chartered FCSI, managing director at Lexington Wealth Management, outlined tips for effective analysis for ‘Step 3 – Analysing and evaluating financial objectives’; Sandy Robertson CFPTM Chartered FCSI, managing director at Acumen Financial Planning, explained the best way to present to clients in ‘Step 4 – Developing and presenting financial plans’; and Keri Carter CFPTM Chartered MCSI, managing director at Broadway Financial Planning, covered ‘Steps 5 and 6 – implementing recommendations’.

After the streams for day two were over, everyone headed back to Caernarfon for the final talks of the day. 

A panel of investment specialists, chaired by Julie Lord, discussed ‘The investment outlook ahead: What are the opportunities in 2017 and beyond?’ 

The recent turbulent political climate has caused concern among financial planners, particularly about their clients’ investments. Citing recent – the German election – and not-so-recent – the election of US President Donald Trump – political events, speaker Marcus Brookes, Schroders’ head of multi-management, said: “If the expectation is that the world is okay, then politics could have some sort of impact. When the thing that isn’t expected does happen, it can change asset class values. As a planner you need to be reeling with every twist and turn, although that is quite hard to do. 

“This year, though, politics isn’t it. The big thing for me is that we’re now moving from an era of quantitative easing to one of quantitative tightening.”

Jonathan Gumpel ACSI, co-founder and director at Brooks Macdonald, urged the audience not to “swallow research from salesmen” when it comes to considering active funds against passive ones. “I think the active versus passive argument has been stirred up by salesmen on both sides. The answer for you is to do your own research. Almost all of the research on the performance of passive funds is theoretical, academic research from North America, which, interestingly, is the one market where passives really do add value.” 

David Coombs ACSI, head of multi-asset investments at Rathbone’s, advised the room to invest in scarce assets. He said: “What’s scarce today? Growth and liquidity. You want to invest in structural growth stories so your clients aren’t buffeted by who’s in the White House or Number 10. You want to be looking at the long-term trends in terms of finance, whether it’s contactless or virtual payments, and the trends in leisure, healthcare and media.

“The speed of disruption across all sectors, be it from Amazon or Uber, is huge right now – and it’s gaining momentum. You want to be isolated from those who are going to be the losers. Sit on a portfolio of those three sectors and you’ll ride through any volatility.” 

Next on stage was CISI CEO Simon Culhane, Chartered FCSI, with a ‘Strategic update on the CISI’s wider activities’. The Institute of Financial Planning, which merged with the CISI in 2015, was set up 26 years ago to serve the public, and those who serve the public, with a combination of the right knowledge, skills and set of behaviours, Simon said. “In short, to become like doctors, lawyers, teachers – recognised professionals. People who put their customer first, their product second and themselves last.”  

The Institute has seen growth internationally – “50 of our 160 staff are based outside the UK” – and domestically, in the form of financial planning. Pension liberalisation, for example, has seen many realise they have pots worth hundreds of thousands and, therefore, need financial advice. 

Simon also emphasised the CISI’s focus on integrity. “The CISI is still the only professional body that requires its members to take an integrity test before they are accepted for membership. Over 50,000 people have done this since we introduced it five years ago.”

Ending the day on a memorable note was Gerald Mwandiambra CFP®, acting chief executive and chief strategist at South African Savings Institute (SASI), director at the Financial Planning Institute of Southern Africa (FPI) and chief executive officer of independent wealth planning firm Sugar Creek Wealth.

He said: “The financial planner of the future will exist online. We need ‘crypto financial planners’. If you were to be googled right now, what would come up next to your name? Do you have a virtual footprint? It’s important that we embrace the media. I’m not saying every one of us wants to be on TV or radio, but when you get the opportunity, get your name out there.” 

He said that Africa is “the last investment frontier,” with South Africa (SA) “the gateway”, thanks to a combination of clients sticking to their financial strategies – 27% of SA clients say they do, more than the US and UK – and a population that will soon be filled with a highly-educated Generation Y and Generation Z. “More education means a higher propensity to earn income.” 

Picking up on the theme of robo-advice, Gerald said: “Reaching new consumers in Africa is all about technology. Robo is our friend, not a threat. It’s a dog sniffing out clients. My time is expensive, and your time is expensive. It can’t tell our clients how to deal with a divorce. The last thing we need is financial planners running away and screaming: ‘Robo, robo, robo!’ Master it.” 

The talk ended with every delegate in the room, at his request, on their feet doing a war cry (similar to the New Zealand rugby team’s haka), written by Gerald for the CISI. Initial disbelief quickly turned to enthusiasm and, eventually, laughter. 

Afterwards, the lengthy queue for Gerald’s book, My money, showed how well received he was. Outside, delegates compared the individual notes he had left each of them on the inside cover.

Gerald said the conference was “well organised and insightful,” that he acquired “good new networks” and would, “God willing”, be back next year where “hopefully it will be even bigger”. 

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Published: 13 Oct 2017
  • Financial Planning
  • The Review
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  • Financial Planning Annual Conference 2017

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