Should Banks Offer Independent Financial Advice?
Perhaps the banks and building societies are realising that it’s difficult and expensive to provide truly independent advice to their clients.
The future for bank customers looks like a choice of a few products from a restricted number of companies. Is that really the best the banks can do? Of course, the reason is that it’s just too expensive and complicated for them to offer a full advice process to their clients, and they have decided to bail out.
Some will mourn the banks leaving the sector, but we should all understand that there is no such thing as free advice, which the banks have been selling. Many people receive what they think is free advice, but undoubtedly they will be led to buy a product (ensuring the bank gets the commission!). That’s not to say the advice was wrong, but the bank is only paid when a product is sold. Truly independent advice should not have to result in the sale of a product.
For too long the paying of commission on products has given a bad name to the profession. A brave new world has emerged where advice is fee based rather than commission based. With the banks leaving the market in their droves, bank customers are left with a choice; stay with their bank and be offered a limited selection of products from a small number of companies or find a well-respected Independent Financial Adviser.
James Ewles wrote this article on the 30th June 2011. The points raised in this article are the opinion of James Ewles only.
James is the Managing Director of Oracle Financial Services.
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