There are people who refuse to go to doctors, preferring self-diagnosis to getting a professional opinion. For many common illnesses their diagnosis is often correct. After all, most of us can diagnose when we have a cold, the flu, or a chest infection. So of course they can “cure” themselves, which reinforces their feeling that that they are as knowledgeable as the medics.
Eventually most 'self-diagnosers' come a cropper when they miss something serious and end up requiring medical help, but getting it much later in the life cycle of the disease than they should have.
We’ve all come across these people and regard them as mildly eccentric. To think that by reading a few medical dictionaries or surfing the net in more modern times you can get the expertise of professionals who have studied and worked in the field for decades and who also have the diagnostic tools to back up their hunches is delusional to say the least.
Yet many of us continue to follow the same path when it comes to our finances. Instead of consulting a professional in order to get a financial health check, we think that we can get by with a small bit of investigation and talking to relatives and friends about their experiences. And, just like the pseudo-medics, on simple financial matters we are able to get a reasonably good result, thus reinforcing our view that we have no need of the professionals.
However, when we come to long-term financial planning – i.e. retirement income and inheritance tax planning - it is difficult to get sufficient knowledge from either other people or the Internet.
Getting information from other people fails because either they are still in the accumulation phase so that you’ve no idea how their strategy will ultimately work out or they are in the decumulation phase in which case their accumulation strategy happened during a completely different era, whose conditions do not reflect the situation that currently exists and so are not replicable. Getting information from the Internet is dangerous because the amount of information available means that every opinion is represented and therefore people end up tending towards pieces that just reinforce their own prejudices.
Despite this, large numbers of people decide that they are in a better position to give themselves financial advice rather than to go to a financial adviser, who has spent his or her life learning about the subject. Why is this? What makes so many people think that they can achieve instant expertise in this area when they obviously can’t in so many others?
Is it because money is such a personal thing to them that they feel nobody else could possibly understand how to look after theirs? I don’t know, but this anomaly is costing people dear and the sooner they break out of it, the better. Mind you, with the regulators constantly introducing new rules to try to tame the sector and the IFAs willingly going along with the changes, there is good reason for journalists and the general public to feel that there must be a problem.
IFAs need to do far more to establish the quality of their own brand and the first step is to stop automatically accepting the criticisms that journalists and regulators sling at them. Higher educational levels have ensured that there is a more professional and standard approach in operation across IFA firms.
Ultimately, a professional body that is as strong as the medical council, both in disciplining members and in dealing with regulators is what is required. Once this is in place, perhaps the majority of people will come back to realising that when they need professional advice, the best advice is to turn to a professional.
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