If there’s one idea that 99.9% of the financial advice industry can agree on, it’s that the key benefit enjoyed by their clients is “peace of mind.” Google financial advice peace of mind, and you get over 18 million results (and it’s not just a UK thing – advice firms are promising peace of mind to their clients in the US, South Africa, Australia, throughout the English-speaking world). There’s even a firm called Peace Of Mind Financial Planning, and it’s not hard to figure out what their brand promise might be.
But the thing is, it’s bollocks. It’s always bollocks, 365 days a year: but it’s particularly obviously bollocks at a time like this, when the markets are down about 15% in a week and it seems all too possible that it might be another 15% next week too.
Speaking entirely personally, I’ve lost more money in the last week than I’ve ever earned in a year, or to put it another way the last seven days have cost me something like ten years’ worth of pension contributions, and obviously I have no idea what’s going to happen next. It could all come back. It could go on down. It could stabilise at something like the current level (quite a few commentators are describing what’s been happening as a ”long-overdue correction,” which means they’re not expecting a big recovery any time soon).
With all of this happening just about a year after I’ve gone into decumulation, it’s a perfect example of the kind of “sequencing risk” that I’ve written about for so many clients over the five years since pension freedoms. But it’s an even more perfect example of why it’s just bollocks to promise me “peace of mind.”
Actually, I could probably come up with twenty other reasons why it’s bollocks – twenty other financial worries which, to a greater or lesser extent, furrow my brow, make my mind unpeaceful and are beyond the capability of my financial adviser to smooth away. Some of them are minor: is it a good use of £4,000 to have a few minor dings hammered out of my car’s passenger door? Some of them are quite major: what effect will the construction of four houses on the patch of derelict land next door have on my house’s value? But none of them is half as major as the coronavirus-driven market meltdown which has resulted in my portfolio losing rather more than £1000 per hour over the last week or so, along with a directly-proportional loss of peace of mind.
If I was feeling really grumpy about this, I would also point out that through this calamitous period my adviser has doggedly maintained radio silence, which isn’t very good for my peace of mind either – although to be fair, it’s a slightly peripheral part of their brand promise, appearing only in the last sentence of the Financial Planning web page which reads “Your Financial Plan will deliver peace of mind and confidence that you are in control of your financial future.” (All that sentence needs is the addition of a couple of carefully positioned “nots” and it would describe how I feel perfectly.)
I suppose there must be some evidence somewhere that people enjoy being promised peace of mind, or else there wouldn’t be eighteen million results for the phrase on Google. I can’t help thinking it would be a more worthwhile promise, though, if there was a cat in hell’s chance of keeping it.