10 - We Need To Talk About Consumer Duty

wrappers over there. But for the moment we're driving off in a beautiful new year. Joining me on this journey for the next 12 months or so if we last that long are the other members of the trapped in the trap pack The three horsemen of the apocalypse. Alan Smith, Karl Witcher Khawaja and the heart gentleman, we have a show packed full of absolutely nothing. So let's start unpacking your

straightaway. Andy Hart giving us a bit of a timestamp, real life planning outcomes and your friend life insurance give us a little Gibson little tail?

him some life insurance. I sold him life insurance when he bought his first home and I was new to this business 2006 It was an okay policy and I guesstimated how much the payout would be because it was to cover a repayment mortgage. Long story short, she contacted the provider. And it's actually twice as much as I very loosely told her what I thought it would be. And it's landed at a time that's just massively helped her and give her given her a lot of

thinking time. I mean, I know we know the benefits of good insurance and good planning, but it's great to see, you know the outcome of it. And as Nick Murray says, life insurance is a love letter to your family once you're gone. And when that money lands. It's it's an it's an it's an enormous thud of a love

letter. So yeah, that's my update on that long story short, the payout was twice as much as I literally told her it's going to be and obviously that's clear cash money that she can live off and spend, and obviously help the kids out and all the other stuff. She had an enormous New Year's Eve party and obviously, money was no problem. I popped in for a few hours. And it was a it was a lot going on. So yeah. All good. That's my

in financial planners. I think it's a useful reminder, they know the fundamentals, the building blocks of a sensible financial plan are, you know, protection against bad surprises, nasty experiences, things that your friends family have are going through. So good reminder, Mr. Hart. Happy New Year,

was really good. My one of my main goals for the year is to finally for good kick the smoking habit, which I know is very very stupid. and is totally and utterly illogical. But I've engaged in that habit for several years now and haven't given them up for a good while. So anyway, Justin has given me some help on that. So part of my plan to kick that habit is to do dry January, which I'm kind of actually looking forward to, because November and December were full on, let's just put it

that way. And I've also for the first time ever signed up for a half marathon in early March, which I have been doing, probably not as much training as I should be doing. But yeah, I was sort of laughing. I was out a few times over December. And I have been out a few times since. Indeed, part of the training plan is to run a 10k this evening. So that's what I have to look forward to after this.

But yeah, look, I just think isn't that it's nice to be able to hire and it's only a day, it's a date in the calendar, right? It's, it's just another day, but it is nice as humans to to be able to have this reset or refresh button, and to kind of I think go at the New Year with kind of a new sense of gusto and energy. And I'm genuinely really excited for the year ahead.

Great plans professionally, but but the thing I'm really focusing on this year is me on putting on my own oxygen mask first, I'm looking after myself, and I know that everything flows, if I do that, so I have some nice plans for my kids

later on in the year as well. So yeah, it's I think I sent in a message into our group there a day or two ago, I'm planning with purpose, and I really making sure that I'm putting in lots of me time in my diary, which I have neglected over the last while which is a stupid thing to do. But you know, we we live and breathe the goals, dreams and aspirations talk to our clients. So I'm going to do that for myself. And I'm going to walk the walk as well as talks talk the talk and 2023.

Alan, anything. We've had a few conversations on WhatsApp by using some similar plans.

finish line of the year. You know, it was a busy December we had you know, team and Collie Christmas dues and lunches and drinks and dinners and all sorts of things going on but a few couple of client things I went to us lot got together and and it takes it all I mean, we're not getting any younger. I'm definitely not getting younger and it takes a toll and I was looking forward to Yeah, to this

time of year. I want to give a shout out to my friend and colleague Mr. Nick Lincoln, who lasted until January the second on his drive. January's you sent a send an image around the large glass of red to see he's hit a few road bumps on the dry January 24 hours into it.

Wow, amazing. And I've in the last couple of years, I've actually extended it I've gone into February as well. Eventually sort of social things catch up with you. But I am going and this is standby to just get abuse on this. There's a there's a thing called monk mode. All the cool kids are doing this No Go monk mode. So just I'm gonna live like a monk. Was that mean? So obviously no

booze. I am eating healthy. I'm going on intermittent fasting which I use I've gone on and off for some just gotten down this track of omad is called one meal a day. And, you know trying to focus on exercise, getting my 10,000 steps in every day trying to focus on rest and recovery and sleep. Getting up really early in the morning and doing just focusing on creative work. I would call it for two or three

hours every morning. I reckoned I just think that I need to get momentum in the year if I have if I have a month of really just focus creativity Stay out of trouble, you know, just just be healthy, good rest, but But you know, do a solid day's work and do that consistently day after day for a month, I think it will set me up for the rest of the year,

100%. And I know that when I've you know, when I've been on eating unhealthy, and I hadn't had rest and so and I'm just not on my best. And so you know, those little jobs and tasks that just I'll put them off for another day. But I just want to get get after it, you know, just get starting first thing in the morning crack on, as I say consistently, day after day, week after week, doing that for

at least a month. I think it just moves you forward, I think you do need to be something of a use of phrase, corporate athlete somewhat, you've just got to just look after yourself.

very aggressively. I'm also trying to, I get so many needy emails from people, I just haven't got the headspace to deal with it. So I'm just going to have to just start archiving more and more emails. Another thing that I've noticed recently in the business world is I seem to get a lot of emails from personal assistants, executive assistants, is excruciating. When you deal with these people, they're so organized and they ask you so many questions, and

they're so needy. And when you're dealing with someone on behalf of someone, it's such a nightmare, I get emails from a PA asking five questions. I know the person they're asking them on behalf knows, but they're just doing such a great job to be thorough about what they're asking, is excruciating. Anyway, I'm gonna move on from that. And the other thing I'm going to do personally, I'm just gonna go to the gym more, I run quite a lot.

So I'm doing sort of too much cardio, a run probably 10 to 15 times a month, so I need to go to the gym a lot more. So I'm gonna try and go to the gym at least twice a week, I basically just need to build more muscle. So that's my, my tweaks and changes to my behavior and work life. So over to you, Nick any anything thrown finally.

Okay, now then we've had some rambling about New Year's resolutions, hopefully, the Trappists are still with us, we need to move on to the meat and potatoes. And this is a subject that is a bit of a dry one, but we can't ignore it. And normally on the real advisor podcast we do try and talk about more eternal subjects around practice management, human behaviors, and so forth, how we can help nudge people to do the right things.

But sometimes we've got to address the regulatory elephant in the room, when the unemployed in suits come up with their next big thing. And the next big thing in the UK came out last year for our overseas listeners, you might want to zone out now perhaps by wouldn't do necessarily because what happens here, especially to the Trappists in Ireland and South Africa, what happens in the UK, in one form of another tends to migrate over to your your financial services world escapes

as well. So what's happening in the UK now, it wouldn't surprise me if some form that came into your world a little bit down the line and what I'm talking about what we need to talk about here, what we need to talk about is consumer duty. Now if you have a regulator that needs great big projects to work on, it's going to invent great big projects to

work on. And I'll have a bit of a vent, and then I'll tell you how I have dealt with consumer duty and how I have a point of difference on it with Mr. Smith. So let's start I think consumer duty is it is a pile of bullshit and it's the most his pile of bullshit from a regulator that doesn't know anything about what we do, or the or what real financial planning is, but it is what it is, and we have to deal with it. And for those listeners who aren't familiar, I'm sure

you all are. But there are some broad outlines of what the regulator wants consumer duty to, to, to deliver, ending off rip off charges and fees make it as easy to switch or cancel products as it was to take them out. I mean, even that it's not easy to take them out in the first place. Well, who said that taking out financial services products is easy, it's way easier or ready to cancel them because taking them out is a

complete pain in the ass. If you want to take out a credit card or a loan you crack on, you can do it in 30 seconds online. So that's the new point anyway, provide helpful and Accessible Customer Support provide timely and clear information. Well, this is a regulator that makes us give clients rainforests to stuff they're not going to read. So you know, look in the mirror

guys. firms should enable clients to make good financial decisions rather than burying key information in lengthy terms and conditions, again, provide products and services that are right for their customers. That is obviously right. We'll go I have a point with that, because I think the regulator's still thinks we're brokers, and everything's about product, right. And for every client, there is the perfect product that will fit them like a bespoke suit, it'll just drape

over the client beautifully. No wrinkles, no saggy bits is the perfect that doesn't exist. We're what we do is as much art as science, we try and find the right products for clients. But what does right mean, and focus on the real and diverse needs Give me strength, diverse needs of their customers, including those in vulnerable circumstances at every stage in

every interaction. So those are the kind of broad precepts behind consumer duty, lots and lots of words as ever, with this kind of stuff and very hard to nail down actually what any of it really means. But if it's some that will continue this is about as far as I can see, a firm must act to deliver good outcomes for its clients act in good faith, avoid foreseeable harm, and enable and support to pursue financial objectives for the clients. Wow, that's really

isn't it? So I kind of stopped I think along with Andy to a degree we kind of just ignored this for most of last year, but we couldn't do by October because we had to have a consumer duty plan in place. So I thought okay, I'm gonna cross this Rubicon and get it done. And there's a guy that we know certainly guy I know, who runs a really good again, micro business in Hatfield up the road from me. But he really goes for this stuff, he'll he'll do it

properly. And I thought, well, he's also called Nick and I thought Nicola had done his consumer duty plan. So I had to look at his and adapt it to myself. And he had been through it all he's got to all the various points that need to be addressed in the different sections. You know, the client proposition? What's the next thing? The best and proposition how you handle new inquiries, how you give advice on products, and I went through it all, and actually having done it all, and

I kind of intuited this. I think it's already baked in. I think the outcomes that the FCA wants consumers to get from the consumer duty program are certainly baked into what I do. And I don't see it as a big problem. There are bits and bobs that I'll need just to address and just to maybe to finesse on. But I don't think for the one man band whose entire business is predicated around having successful client outcomes because his clients to be blunt, his clients are his or her

living. And therefore it's totally aligned with having happy customers happy clients. I think consumer duty is baked into everything that we do I have one within that all of that the FCA keeps on banging about how we as the seller of advice has to demonstrate value. Only a monopoly provider of a service that we have to buy could come up with such stupidity. Through history, the seller names the cost, and the purchaser determines the value. The seller

does not determine value. FCA I'm sorry, I'm not going to say whether my clients are getting good value. It's for the clients that determine but everything else I will take on board. And I think I'm there with it. I really didn't. I went through my consumer duty. I didn't see anything. I thought crikey, I'm not doing that. I'm in big trouble. Because it's just second nature. It's like breathing to me the things the FCA want me to do. I've been

doing them for bloody years. Mr. Smith, I know that you've done it because you're, you know, you are, you know, a multi ri business. And you you've embraced this and you've got it all in place in time. And you you've got the difference to me as well. You've got a board and you've got people to report to and that and with consumer duty, everybody has to buy in at the exact level whether you're regulated or not. It's got to be like a cultural shift from the top. You put a tweet out last

year. Sorry, put out some in social media, but I think it was a tweet saying we've just done our consumer duty plan cannot see how the small or micro businesses can have any chance of keeping on top of this or words to that effect. I really disagree. I think the micro businesses are the ones who are

going to find the easiest. I think those small are IFA firms who are perhaps the old style three plus three plus a half Those who don't do financial planning who use D FM's who put the product that center everything without doing much financial planning? And who and and perhaps have our eyes who all do in different investment propositions for people. Yeah. So Mrs. Miggins, we'll get one client response from one advisor investment response from one advisor at a different investment response from

another. If I was running one of those businesses, I will be absolutely wetting the bed. But I don't think for the micro yrI, who does full fat financial planning, it's a problem but go on disappear.

this year. So I had a look at it. And I thought, I mean, our implementation plan is 31 pages long, there are sticking in there 142 142 action points on it. Now we're a bit of a bigger firm than yours is Nick. But we're not a huge organization, we've got a limited amount of

resource to do that. And I look at our thought, holy crap, if we're supposed to do all this in the timescale, then what does this you know, literally a one man or one woman band supposed to do, whose main day job is showing up and seeing their clients, because you're gonna have to, you know, your weekends are going to be packed, I've had more time to reflect and look at

this. And I've recognized the term proportionate, because of the huge number of things that you probably won't have to do to say, not applicable, not applicable, or we don't do this. My overall view is, this is a good thing. It's a good thing for the people on this that the three of us which are impacted by it, call some point in the future might be because it to me, it kind of it's a it's a consolidation of all the kind of rules, the prod rules, and RDR and T TCF, and all that stuff

has come in over the years. And it's summarized it and I think if you are complying with this stuff, you're running a good business bottom line, you've got all your checks and measures in place, you are reviewing things, the value for money, things and other I think it plays into our hands, frankly, you know, if we can demonstrate value for money all day long, whereas the sort of firms that you described, Nick are going to struggle a bit

more. And I think also the larger brands or larger firms, some of the the firm that shall not be mentioned, Nick, play the play The jingle. You know, that, you know, that the estimate the

power of the dark side? Yeah, I think demonstrating value when you're charging, you know, two and a half percent a year, and you've got huge exit charges and penalties and so versus the market, you're going to struggle, I think, and honestly, I think that overdoing it a bit, I think the the success of this huge piece of legislation that impacts every intermediary, and every, as they call them, call it manufacturer or product provider effects the entire

sector. The success of this will be demonstrated by how organizations like St. James's place and others react and how it will be dealt with. Because unless firms like this significantly changed their proposition, their model the exit charges, then it's, it's been a waste of time, frankly.

So yeah, overall, it is a bit of work it what it does is it makes us it just makes sure that we're running a really good business, we've ticked all the boxes, we've got access, as you say that most of us have got all this stuff and he's checklist and his forms up. But is it immediately accessible? Is it reviewed as often as it should be? Is professionalizing the industry a bit more? So? Yeah, it's, it's, I don't I don't think it has huge impact on

firms like ours. But there's other parts of the industry that have to say, frankly,

my blood. And then I breathe out and that's carbon, whatever.

So I think if this is another step in the right direction, if it reflects better on you, if more people seek your services because of identify this seems to be a increasingly more professional sector, then it is better for all of us. So I've kind of come full circle I've gone from this is this horrific piece of work to say? Yeah, it is a bit like breathing in and out but if it gives us a bit of a reminder as a business and it's a good mixture, we have our

doubts SNA robots. What do you think Andy?

quite interesting. Yeah, I've gone through the whole process, like Nick mentioned with my compliance consultant and gone through all the good news is a lot of these roads, again, leading to proper financial planning, laying out the client's goals and context. So again, it's just as Nick says, it's all sorts of good stuff that we should already be doing. But it's just gonna give people a bit more of a nudge to it. That's my two pence on it. So back to Unit, maybe, oh, Carl's got anything to say?

hasn't happened. However, the wheel is slowly turning, and I would just just listening to you guys, I think you're kind of all on the same page. And I think you've all nearly come to the same conclusion that if you're doing real financial planning, you're doing most of this stuff already. And yeah, I get it's a bit of a pain having to write it down and document it all. But I think, you know, corporate governance can only be a good thing, and it will weed out a lot of the people who shouldn't

be doing the business. However, Alan, your point about St. James's place and exit fees, or whatever, I think I'm demonstrating value. And marketing spin, can do that all day long. So I am not sure it's going to change much there. But look, in terms of making, what

we do more professional. And if it brings more people around to real financial planning in the UK, and then in Ireland, and I do see, through this podcast, I'm talking to an awful lot more people in Ireland an awful lot more people who are seeing the light and going Yeah, real financial planning is where it's at, I would think is a good thing, I genuinely hope that we do get some sense of this kind of stuff from our regulator in Ireland, I think can only be a good thing. I understand that.

You know, it's, it's, it's a time suck. But, you know, we appointed a head of compliance here and emeritus a couple of years ago. And, you know, it's one of the best things we ever did. And I think corporate governance can only professionalize your firm. And it can only make for a better client experience, ultimately. So therefore, that's a good thing.

the whole sector. Look, you've got the legal profession that's been doing their what they do for literally hundreds of years, as is and ours is a very new profession, but they've been doing for hundreds of years. There are still dodgy lawyers out there, but there are fewer of them. There are fewer dodgy financial planners bit by bit. This just weed out the Cowboys there will always exist will always be somebody gets the Roundup, but I just I believe there are fewer of them now than newer.

review. And there'll be going around saying, Rob, we want to see your plan. We're going to come into your offices and or send us a digital link to you consumed. There'll be follow ups they'll be ripples going forward. Okay, A interesting interested to hear your view as well call in the show notes. You said we didn't have the balls to do RDR you were far more of diplomatic about it and speaking about it then my friend. Good work.

because they couldn't. This is no story.

you, they left. So yes, that so there was it was a significant piece of legislation. And they, you know, because I've been in this business a long time, I've seen them or I remember when commission disclosure was brought, I was I was not an advisor, then but it was gonna you know, you have to actually tell your customers, your clients, how much you are earning a piece of advice, and

it's a shocking, immunize. When I was working for a product provider, you speak to my ifas, and they were all just freaking out about it, how can I possibly tell my customers what I'm going to earn from it? And then you had of course, a commission disclosure on quotations, which often would get dropped off the, you know, mysteriously removed from the stapling?

right? the regulator's buddy compliance, and I thought, if I can get a step ahead of it, if I can understand, like the rules of the game, and I can optimize it the way that we would, then you're either I agree with you, Carl, if it's making life difficult for everyone else, and we've just got to spend a bit of time and attention to make it better or smoother. That's that's a competitive advantage for us. And that's the way I treat these things. Like yeah, I huff and puff like everyone else

does. But I think right, you are the one you are the player on, you know, understand the offside rule or don't play the game. That's the way I see this. Have you done it to death, Nick,

this, my friend. So Dan asked, excuse me. Currently having another look at our fee proposition mulling over a hybrid model, ie fixed options for planning and then a lower percentage for running the investments. Also, why bother with initial fees, which could be friction to bring on a client, when the long term planning fees are more important to the business? What are your thoughts? And car? What do you have to say on that, my friend?

That the first point is you, whatever fee structure you settled on, you have to be very comfortable yourself that it is something that works for you and your firm. And that sounds like a very obvious one. But we've done we've we've had fee structures before that we weren't necessarily comfortable with, that we didn't feel was right for our business or whatever. So that's the first

point of make. And the reason I'm making that point is when you're talking about doing, you know, a planning fee, and then another fee for implementation of investment management, for me, there are no right or wrong answers, I feel here. Right. But for me, that seems to add complexity. And it seems to I'm not sure, would the clients in general, understand it? And get it? And would they be able to very quickly come to what's actually what's the amount that I'm going to be charged here?

And is that value for money? So So for me, keeping it as simple as you can as understandable for clients straight up is really, really important. So for us, we charge a fee for the plan itself, right, but, but that's a one off fee for the plan itself. And then we have a trail fee, as you know, right? So and that depends on the the the level of the assets being invested. All of this is on our website. So you know, anyone can log on and see what we charge. But you know, for the for the meaty

stuff. It's, it's a half percent trail. The thing for us in Ireland is that, you know, we disclose that straight up, tell our clients all of the time and as you know, were being paid a half percent. And the clients are like, I'm being paid, I'm paying Metis an extra half percent, or an actual fact it's the exact same as the product sellers are charging them just they're not disclosing exactly what they're being what they're being charged. So, so for me, I think, you know, kick Yeah, kick

it around. Try and, you know, do variations of it, see how it feels in your client meetings, see, see how the clients are reacting and But you probably do need to come to something that you can settle on for the long term. And that was one thing that we struggled with being perfectly honest. But we've settled on a fee structure. Now. We've been at it for maybe four years, everybody knows that. We're very comfortable with it. And, you know, it just

streamlines our business. And everybody knows exactly what our charging charging structures are. But I know people are different. And I know Alan has is on the fixed fee model, we're on the trail model, I wouldn't have any problem if a regulator said you have to go to fix fees, I go fine, no problem at all, because we just demonstrate exactly the value we add for the same kind of numbers. So the one issue I do see with the fixed fees, is, you know, I like the idea that when assets are

rising, the client is happy. And our fee income is rising also. And when markets are struggling like they did last year, that our income is down. So we're kind of we're in the struggle with our clients. And we're looking to the long term all at the time. And I know it's a simplistic view. I know Alan disagree strongly with it, but I actually think it kind of it does align, you know, what we're trying to do together. So that's one of the reasons I like it. But But having said that, I

would have no issue. And I've listened to Alan, I probably every second time, myself and Alan have this discussion. I'm kind of with Alan, I go, Yeah, that all totally makes sense. And then I can we know, look, what we have is very, very easy to understand for our clients. So I probably have more say in this but probably at this stage of bringing it on, because I think the fixed fee versus trail thing is kind of what Dan was trying to get at. So So Alan, be very interested in your in your views.

commercial decision. As for any business, you decide if it is creating, the starting point is everything should be value for money, As Nick said before, value for money is determined by the customer, the client, not necessarily by you, if you're losing out on business, and clients are not engaging with you, because you charge an initial fee, then you might want to reflect on it, you might want to minimize it, or remove it

completely. And we've gone, as you see, all of us who are thoughtful business owners, we're always kind of reflecting on this, and maybe adapting and changing it. And we've gone from charging initial fees, and for some years, we charge nothing, pretty much to anyone. And then we reflect on that we think we're leaving a lot of revenue on the table here, because there isn't much resistance if you're delivering high quality service, professional implementation of the building the plan and

professional implementation. I think, first of all, it costs us a lot of time resource and energy to do that. And so why wouldn't we be compensated for it? We don't what where I have an issue is where it is the standard and we're not all everyone on this podcast are are more thoughtful, I know you are. But to default to say we charge 3% of your investments to implement and 1% a year or whatever it is, which seems to

be a sort of broad default. In the marketplace, I think that's wrong, because there's a big difference between a client who just didn't know they've sold their house and sold the business got a million pounds in cash, implementing that, versus a whole series of sort of complex pension products, trusts offshore, or whatever you want to call it, and charging a sort

of same fee. So and I think in linking this to the previous subject of consumer duty, if this is forcing businesses, which are just a bit complacent, frankly, my opinion just charge the same fee to everyone regardless, which that means there's winners and losers. It means the client a very simplistic needs and requirements is paying a premium in order to cross subsidize the client with huge complexity, who's paying the same fee,

sometimes less fee. Do to do that piece of work so so the initial fee, I think it's a business decision, a personal decision, and I can see a bit I can see a lot of justification in just eliminating it not paying it at all, because you're interested in the next 10 years of revenue from the client if it's if that provides a real you know, road bump against you winning that, then minimize or eliminate it. I would say

specifically on that point. We have won clients last couple of years from and they've got a couple of mentions on this episode from some James's Place, these clients have already been rinsed. Once they've already paid big initial fees or exit fees or something. And we've just taken a view, we're not going to double down on that we're going to sort of take that on the chin ourselves, because of those circumstances. And just because we want to bring them

into our, our environment. So I think that you can you can do it on a client by client basis, or you can have a company decision that the bigger question is about the percentage charge versus a flat fee. And my views are well documented on it. Everyone on this podcast believes that the real value in what we do is in planning, it's in, it's in coaching, it's in project management, it's in being a sounding board is doing all those good things. It's not

in money management. We're all we evolved to live, we all I believe, have got world class investment propositions, portfolio management propositions. But Carl, just to come back to you on that point, the fact that the market goes up, down sideways, it's got nothing to do with you, as you know, you have no control of the global capital markets. So why are you being rewarded when they go up? And why are you being penalized when they go down?

What is the product? What is the service that you deliver to your customer? You know, what it is? It the clues in the title of the podcast is in real planning. And so that doesn't change, you still show up every day or every week and deliver that? And so I have so we're now in our I think our seventh or eighth year of doing flat fee retainers. And to answer go back to the original question that Dan has posed, you know, we have we're one of the few companies there's still very

few who operating this way. But we've proved that you can survive, you can operate on this basis. We've learned a lot of lessons about how you create how you position it hard because I can tell you behaviorally, and the way that people think 5000 pounds fi just sounds a lot more than a half a percent or 1%, or whatever it is. I've got

numerous examples. I won't share them now in the interest of time, but we're clients have really pushed back and we our fee was actually less in pounds and pence than they were currently paying. But they've said well, that's a that's a bit expensive. Because just there's some cognitive blind spot spot. The people have got between pounds and pence and basis points. And that's one of the reasons that the industry has thrived so much on the percentage charge. Now let's head over to Nick.

charge. But to directly answer Dan's question, fees can be split into ongoing fees, or initial fees. And again, we all know this, but I'll just explain it a little bit more detail the way I see it. So the ongoing fees, the most common way of charging is a percentage of assets. I believe this is probably circa or 95% of the financial advisor market. 99 point whatever percent of the investment management market, they all charge an ad valorem

fee. So it's a beast, and it's not going to go away overnight. As such, we talk about flat and fixed fees. I think that it's not, it's not correctly framed, I think it should be agreed fees. And they're certainly not flat because they're different for every different client. They're certainly not fixed because they change. So I think we should be calling them agreed fees. And it's a little bit more

clear for the clients. And then you've got hourly charging, you know, shoot me now, nobody wants to be charged on an hourly basis. Anybody who's had extensive experience with lawyers will concur what I say there, move on from that. My lawyer charge me 31 pounds plus VAT to read an email of me saying thanks for being courteous.

fixed fee, or a hybrid. So I see this hybrid model being sort of discussed with quite a few people were very simplistically, we charge 99 pounds a month standing order plus half a percent fee or 299 pounds a month plus point 4% on the investment aspect. I believe that probably is the fairest and cleanest way of doing this because then your wealthier clients do pay proportionately a slightly more expensive fee but

not widely. You know, the whole saying is is someone that's got a million pounds versus 100,000 pounds to 10 times more work because that's the, you know, fee discrepancy. Again, we can argue about that all day, Allen spoke about it, you know, human humans are full of emotions and the placebo effect is real. And high friction, low friction of fees, which I think it's, and I'm also agree with Carl's point, it is aligned, when it goes up, we do better when it

goes down, we do worse. I haven't got a problem with that. Because at the end of the day, we are in the wealth creation business. And again, we shy away from the fact that we do create wealth for our clients. You know,

clients in decumulation? What about clients who say, I want to take a big chunk of money out and buy us a second holiday home in the south of France, or want to give my kids and all that stuff, so you take a haircut on your fee,

Fantastic. By the way, Mr. Client and Mrs. Lined your assets under management with Metis, Ireland at the moment, are now gone from 1.3 to 800,000, your fee, unfortunately, is going to increase. However, through market growth over a period of time, we would expect it to go beyond a million. And we will therefore reduce the fee at that stage. So we're not what you know, it's not like we ever have a conflict of interest or we're going please don't buy the

house, right. And I have any number of examples where we've celebrated wildly, that clients have been in a position to be able to see their plans through.

property ladder. That's just a statement of fact, it is if you just look at the they're paying more, there's more revenue that that client is paying to you who didn't do those other things just chose to have more money managed with you.

million pounds. It depends what you're saying your fee is for and how you're trying to sell your value for the client to determine whether you have got value if you're selling your value on behavioral counseling, from not making the big mistake. You're going to save the person with the bigger to be crude the bigger pots of money from making a mistake that would cost way more than the person with the

smaller pots of money. Hence, your fees commensurately bigger because you're creating a bigger and preserving a bigger slice of wealth for them and for their children. That's the answer to that one. I too have a tiered approach. It is difficult if clients want to disinvest and you're on a flat 1% or whatever it is across the board. And I think you guys know I've got a really steep tear because it's my kind of and I adopted this back in 2008. I thought this I

can see this being a problem. I will I and so my feed drops off too. magically over 500,000 pounds because you get clients in, you know, you were selling dreams, right? We're selling lifestyles and clients are therefore going to say Hold on, I've got this dream of buying this holiday home and the door door and or the speedo, whatever it might be. And I know we've got the funds to get that, Nick, because you've helped us get

these funds together. And you want to be in a position as Andy said, Well, there's very little conflict of any and you say, Yeah, fine, go ahead and do it. So a tiered approach does help with that. But if you really don't want to lose the revenue, just do a new plan. And so you can't afford it. That'll be my argument, just, you know, like the clients, that the last one was a joke. There is no perfect fee fee model. I

charge initial fees. I do charge the ongoing planning, the financial plan is dead. It's almost stillborn, right. As soon as the client walks out the office, something happens to her life that changes the financial plan, the ongoing planning, we you just changed, and you do the nuances here on your to get the clients to their destination. That's where the value is. And so definitely, that's where I think our fee focus should be

on. But interesting as well, I think Alan might have mentioned the consumer duty, I don't have an initial fees, I have no exit penalties. It's ultra clean, the client comes on board, clean, if they want to go and leave any time. Get out, there's no cost to you to go doing. So you're not locked into anything. It's just very easy to articulate that to a client. So they just understand exactly what they're paying, and how much it is.

That's That's what I think that anybody else want to wrap a bow on this one.

There's loads of mistakes we've made on a flat fee retainer model that do things differently for time and time again. But I get a lot of people asking me

about it. There's a resource that I can point you to I did a thing with Lee Robertson as a friend to the podcast on his Octo platform last year did a sort of one hour webinar type thing that I just unpacked all the everything I've ever thought about via a you know fee model structure, what we did, how we priced it, if anyone's really wants to have a deep dive on that, jump over to Lee's Octo platform, talk to members and just sort of search for that thing that I did a year ago or

nine months ago. That's it

Trademark Nick Lincoln, money dies in cash and bonds. So we're interested to know how you guys approach clients in decumulation with 30 years of retirement ahead of them, where sequence risk comes into play. I'll go first if that's okay, I'll be brief. And then somebody else wants to be brief. That's fine, but it's not all the sake of it. bucketing, you bucketing you have to do whatever your 12 months living expenses in cash or short dated ultra short they

do Global Bond Fund. And when the fourth year out of four comes when the markets decline, and the client hasn't got sufficient fat on their portfolio from the years of growth beforehand, then you dip into the dip into the bucket. Okay, where the cash is. The cash is dying in long for the long term, but it's there for you for the short term, one or two years worth of living expenses, minus state pension rental income final salary in

that bucket. You lean on that when the market goes through a temporary decline By the if that gets exhausted the market should be through the worst of it as ever. It's art not science man, you can have all your lovely graphs and programs that simulate 100 years of past performance. All you're doing is simulating past performance. We don't know what the future holds. But we have a we have a clue, right? That's how I get

the D cumulation. quandary sorted for my clients and that's how I will handle it myself when I enter retirement. If I enter retirement, gents, any other views on that?

will I will. Let's let's get it out there to all of you. I'd love to hear how you grew your business, his at the beginning of the journey, in particular, your approach to acquiring new clients. The podcast is fantastic. And I've already picked up so much from you all. Thank you, Martin. You're sharing your experience and knowledge is invaluable to those starting out in the profession. Thank you for your efforts.

Well, that's lovely. That doesn't mean that it does mean so much when we get feedback and the little feedback we had as a positive. Thank you. So okay, what have you guys? How did you approach acquiring new lake?

have this podcast. But having get if people are getting value from it, then you know, honestly gotten to the end is unfortunately it is and the apple podcast platform that dominates the market. So giving a review on that the whole algorithm works is there for the message gets spread more. But do anyone who's listening to this, do us all a favor and spread either, you know, give us a five star review, write up something but also send the link to your other friends and colleagues.

Because, you know, often we've already talked about the subject and you get asked a specific question. You said, Well, no, I've got I've done I've had a 30 minute segue on this in the past. So just raising that things people should be doing their best to spread the word about this port.

more of a hunter, right? You've got to be more of a hunter you got your filters are going to be a little bit down because you just need to take clients on board as you get more mature in quotes. As you get older, you will change your approach perhaps so that's that's a really good point. Okay. I think we've done that the two great questions from Chris and Martin with a why my heart goes out to you. Let's what we laughingly call culture corner. Let's

transition to that. Okay, so, Mr. Smith, we'll start off with you, you have come across something called optimize? Yes, I have. So

day to consume them all. So this thing is called it's an app and we put a link to it. in the shownotes is called optimize with Brian Johnson. And I came across as he was charging 100 pounds a year for this app is now free. So every great book you've ever thought about, or heard about, or read or haven't read, but we'll have another time to do, he creates a summary, which is a written summary, which is a nice kind of PDF format, which you can read

or download. And or there's a short form video, which like up to a 15 minute video, if you wanted to, you know, you want to read whatever it is, you know, atomic habits, or the psychology of money or any of these books over the years, but you just feel you haven't got enough time for it, give it 15 minutes. And you'll get I've often thought I've read books in the past, it's taken me I'm a quite a slow reader, it takes me quite a long time to consume them. For you

know what that can be. That's the three bullet points that can be summarized quite quickly. And so I think it's great, I think it's a free app. And if you're into learning and personal development, then optimize is what it's called. I'll put a link to it. Before before we move on next to the next part I

issue. That is, is live. And I would like to encourage the listeners who are who it's relevant to, to do something about this, it's you might have picked up over the festive season that there's a current spat going on, it's a bit of a coup de tar going on in the sort of, in the rural in the kind of professional services space right now, in terms of the P F S, which are three of us, in the UK are members of is currently going through a challenging period of time where it's effectively its parent

organization, the CI Chartered Insurance Institute, is kind of attempting a bit of a takeover. It sounds like there's there's a lot of money at stake because a lot of control at stake and a lot of activity that's gone on, which is questionable, shall we

say. And I would encourage everyone and again, I'll put a link in the show notes to those who are interested in this to go on and give your support via it's called rpfs.com or dot code at UK again, link in the show notes to give support and show some resistance as part of the PFS, the personal finance society against what is what Yeah, it's a coup that's going on without going to detail on

this podcast. It's worth showing showing some support for those that are trying to protect the integrity of our main kind of body that were subscribed to and a members of so I want to just say that before we before we wrap up, wrap up. Thank

that one anyway, great book. But by the end of it, I was like I was ready to throttle the guy reading out the book.

I think I love to see or hear or listen to an awful lot more audible books whereby there is more media involved in it, you know, because obviously the technology is there and it just makes it just such a wonderful lesson. It is part of it are a little bit mad. But hey, you're going to get that in the 20 yard book aren't yet but yeah, absolutely. I'm loving it, loving it loving it. So yeah, if you're into YouTube's music at all, have a lesson even if you're not I would recommend it.

I think it's really well put together and hopefully the future of audio books.

season was set in Sicily. It's like a love a love poem to Sicily Sicily dominates the beautiful tragic island of Sicily the scenery and everything but it's great white load as well worth watching. Something not worth watching is Glass Onion, which appears to be the movie does your absolute shite. Penny and I now I've got

into were quite good. Now I read something two years ago, one of the people that we will follow things and if you're reading a book, and you're just not into after 20 minutes, half an hour, throw it away, and go on to the next book. Don't worry about the sunk cost of the 20 minutes, your life's too short you won't enjoy that book and pick up a new book. And now with TV pen and I sit down on those days when we're talking to each

other. And we try and watch something and we can you can ensure it within the first 30 seconds if not the first five minutes for the Sunday is going to be good. Regardless of the reviews. You get the camera angles going to be rubbish, the script is going to be clunky. Glass on your head. Daniel Craig playing an American I mean, there are 368 million Americans. Why do we need James Bond speaking in this cold, awful American accent so glass only in

interesting. Get the questions into us on the TRAPPIST form, everything is in the show notes. Everything is just made for you just like us. And subscribe to us and share us with your peers in your office. This is where everybody in the advice chain should get some value from from what we're doing hopefully and the more you tell us what you like and don't like the more we can curate and cultivate the show. Because it's organic. It's about it you the listener that drives this as much as asked for

it. He is talking all the time. I've talked all the time again. Are we done guys? I think we are brilliant. See you next time.