There are two types of
financial planning - Product or Client Centred.
Product Centred Financial Planning (PCFP): Where you treat the money as the client, rather than the customer; and
Client Centred Financial Planning (CCFP): Where you treat the client as the customer, rather than the money.
PCFP is the approach used by adviser-distributors,
intermediaries holding agencies with product providers.
- The adopters of the ISO22222 product sales standard. The PRISM sellers.
Protection, retirement, investments, savings, and mortgages.
- Asset-based fee advisers. Transactional. Remuneration is
- PCFPs sell product. Products do not create wealth, people do. With their
entrepreneurial spirit and industry. So PCFPs manage wealth, rather than create it. Products manage wealth.
- Investment returns are lower via PCFP advisers, as their fees clip
- As one Telegraph reader describes it, PCFP is a service for the stupid
- PCFPs disintermediate ninety-five percent of the population with advice
- Here the adviser is always seeking a product sale, as that is how they
- The smart rich use D2C platforms to access commoditised investment
- Often products are sold where they should not be. This route is heavily
regulated. PCFP advisers are registered so their conduct can be monitored and managed.
CCFP is the approach used by advisers or
non-intermediating financial planners who are not agents of product providers.
- The fiduciaries. Those who place client best interest first.
Fee-for-service advisers. Relationship based. Non-conflicted.
- All they sell is plans. Often, a product is not a necessary
- Ninety-five percent of the population have insufficient wealth to
warrant a product sale. For the unwealthy, the solution is often to create wealth. CCFPs provide wealth creation strategies in their financial plans.
- Where products are required, CCFP educate the client on how to use D2C
platforms to access commoditised investment returns.
- Investment returns are higher than PCFP route, as there are no fees
- There is no risk of mis-sale, as there is no product sale. There is no
need for this route to be heavily regulated. CCFP advisers are often not required to be registered with a conduct monitoring authority.
There is a global trend
for regulators to split adviser-distributors due to conflicts. Australia in 2019. India 2020. Will we see this in the UK in 2021?
The UK is currently an adviser-distributor or PCFP
market. The processes used are distributor centric.
PCFP markets cause a major problem for consumers. As
consumers hold pots of savings, often orphaned and forgotten to the benefit of provider shareholders. Pots all over the place. Churned over and over by the adviser community to generate fee
Consumers in a PCFP market do not have their lives well
planned and are asked to hand over assets. Trapped on the treadmill of work existence for the best part of 50 years, so advisers can tap into their assets with the promise of finding them happiness
in the last sixteen years. A bet most will lose.
Over the lifetime of multiple adviser relationships,
consumers are left with, often forgotten, orphan assets in closet-tracking high charge funds. Or switch from platform to platform incurring unnecessary transaction charges. Data is captured and
replicated on multiple distributor platforms adding to cost. Arrangements are inefficient and not portable.
In CCFP markets the data sits with the consumer on a
client-centric platform, as it should in a GDPR compliant world. Data is captured once and shared with multiple advisers at any one point in time or along the historical lifetime. Lowering
transaction costs and improving customer lifetime values. The model is efficient, and adviser relationships are portable.
In PCFP markets there are many layers of unnecessary
middlemen tapping into client asset: intermediary, intermediary back-office system, intermediary network, intermediary centralised investment proposition, intermediary platform, product wrapper
managers, collective investment managers, underlying collective investment managers, custodians, nominees, stock exchanges, traders, taxman, and more. PCFP investment returns are lower as
intermediaries clip NAV.
Four in five advisers in PCFP markets are carrying out
regulated business on behalf of someone else, either as an appointed representative of a network or an employee of a national or one of its subsidiaries.
These PCFP networks and nationals run Centralised
Investment Propositions (CIPs) to clip NAV, a practice known as “asset hoovering”. They hold billions of pounds in these propositions. SJP £13bn. Quilter £10bn. Hargreaves Lansdown £7bn. Openwork
£3bn. Tenet, Succession, Investec, In Partnership each £2bn, etc.
The life companies hold shares in the networks and
nationals, so double clipping NAV.
Advisers using CIPS often portray themselves as
“independent”, when clearly they are not.
Eight out of ten advisers in PCFP markets charge
initial asset-based fees. Nine out of ten advisers charge ongoing asset-based fees.
The networks and nationals insist that advisers levy
asset-based fees, and fee-for service is prohibited. PCFP nationals and networks ban advisers from setting up separate CCFP firms.
The advice of PCFP advisers is limited to product
The advice of CCFP advisers is limited to generic
advice and financial education.
The cost of PCFP advice is high, due to hassle,
red-tape, cost of regulation.
The cost of CCFP advice is low, cutting out red-tape
and the need for regulation.
The PCFP advice market is a Cash Cow:
- Advisers are sat on large books of legacy asset taking clips on
- There is a lot at stake financially for the adviser and their family to
- Conflicts exist between their own interests and that of their
- Advisers wrestle with their own conscience about client
- Yet face industry ridicule and resentment of peers, whichever path they
choose to follow.
The Academy of Life Planning is a CCFP network. We
can help PCFP advisers. We provide a PCFP-CCFP steppingstone. A half-way-house. Where advisers can learn the CCFP skills and apply them in their PCFP models.
Contact us to find out more.