The hosts dive into the nuances of the financial advice landscape, discussing the shrinking advice market and evolving regulations. They tackle the performance of equities amidst volatility and the significance of inflation on investment choices. Listeners are introduced to the dynamics of public companies transitioning to private equity, alongside insights on banking performance. The conversation also touches on psychological impacts of market fluctuations, emphasizing proactive client education and communication during turbulent times.
01:28:41
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Quick takeaways
The podcast highlights a concerning trend where only 9% of the UK population pays for financial advice, down from 11%.
The hosts discuss the ineffectiveness of volatility protection funds, which fail to deliver on their promised guarantees during market downturns.
There is a growing emphasis on comprehensive financial planning standards in Ireland, shifting focus from commission-based models to real financial advisory.
Deep dives
Engagement with Listeners
The hosts emphasize the importance of listener engagement, encouraging their audience to follow them on Twitter and suggest themes for future discussions. They share positive feedback from listeners, highlighting how the podcast provides valuable insights for those in the financial advisory field. The presenters enjoy the banter among themselves, which contrasts with the serious nature of the financial topics they discuss. Reviews from international listeners affirm the podcast's growing popularity and its perceived value in enhancing financial knowledge.
The Impact of Consumer Duty
The recent legislation termed 'Consumer Duty' has prompted significant changes in the financial advisory sector. Advisors are reportedly reassessing their client bases, with some firms reducing their clientele by as much as 20% to enhance compliance and service delivery. The discussion reveals a concerning trend where only 9% of the UK population pays for financial advice, down from 11%, indicating a growing advice gap. This shift raises questions about the accessibility of quality financial advice for average consumers, particularly as the regulatory environment becomes increasingly stringent.
Volatility Protection Funds Fail to Deliver
The hosts discuss the shortcomings of volatility protection funds, emphasizing that these vehicles, often marketed as safe investments, do not fulfill their promised guarantees during market downturns. Their discussion references a substantial amount of investments flowing into these funds, yet they have failed to provide the intended protection against market sell-offs. Despite their complexity and attractive marketing, reliance on such funds can lead to disappointing results for investors. This pattern reinforces the necessity for thorough understanding and a more cautious approach towards investments that claim to cater to emotional responses in volatile markets.
The Role of Financial Planning Standards
The conversation explores the growing awareness and implementation of financial planning standards in Ireland, led by the Financial Planning Standards Board (FPSB). These standards aim to promote real financial planning, moving away from traditional commission-based models. There's a shift in perspective as younger advisors increasingly recognize the value of comprehensive financial planning over merely selling products. The hosts express optimism that this gradual awakening will lead to a stronger understanding of financial planning practices among both advisors and the public.
Managing Client Expectations
A substantial part of the discussion revolves around managing client expectations during periods of market volatility. The hosts agree that the investment landscape has changed, with a need for advisors to educate clients on historical market behavior and the randomness of volatility. They highlight the challenges posed by modern media, which amplifies panic during normal market fluctuations. It becomes clear that proactive communication and education are essential to maintain client confidence and to prepare them for inevitable market downturns.
Culmination of Market Knowledge
The episode concludes with an emphasis on the importance of deep knowledge about market dynamics, particularly when advising clients on their financial futures. The hosts advocate for using historical data and trends to guide clients through uncertain periods instead of defaulting to knee-jerk reacting to media headlines. They encourage each other, as well as listeners, to remain steadfast in their philosophies and strategies amid market turbulence. This persistence and education are portrayed as crucial ingredients for long-term financial success and client satisfaction.
In this latest pile of TRAP, the Trap Pack discuss
Topical issues, including FPSB Ireland making great strides, Truflation, the primacy of equities, CISI Chartered Status, Verve Incubator, Hargreaves Lansdown delisting, HUM London nearly sold out
Meat and Potatoes: Much Ado About Nothing
Questions posted by our beloved TRAPist https://twitter.com/JoinedUpJill
NL/AH - Hargreaves Landsdown delisting: will the last company to leave UK plc please turn off the lights:
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