Minefield

I started my career at a tumultuous time for advice givers. I explicitly didn’t (and don’t) give advice, but I gave technical support to those who did. I get uncomfortable about the risk transfers that go on in advice giving. The person paying thinks their job ends there. Releasing responsibility for their decisions. The regulators jump in with frameworks that oversimplify what risk is. The advisor is stuck in an odd space trying to make the economics work in a minefield of conflicts of interest. The industry was changing from a model where product providers paid up-front commissions to a fee-for-advice model. A “Polis Smouse” (policy hawker) would simply try and sell investment and risk products, and then churn them by selling another a year or two later. Fees are supposed to encourage independent, objective, advice. The challenge is that is expensive. Good advice is bespoke. It is a relationship. It doesn’t simplify risk into high or low. It sees the person and risks as the complicated beasts that they are, and cares. This is still an unsolved problem. The economics of transactions simply don’t work when the product is a relationship. My view is the answer lies in building financially secure communities. Empowered Local can handle complicated.