Hi, I can only speak to reasons why from a UK perspective, however it may still be applicable in a wider geographical sense:

1) To have a holistic, financial plan.

What I mean by this term is a truly comprehensive understanding a client's motivations, aspirations, hopes and dreams for their life and providing a plan on how to achieve this. Ultimately this approach comes from the belief that your money is there to help you live the life that you want. This holistic approach will encompasses all areas: protection, retirement, investment, savings, mortgage, tax, long-term care and inheritance. Not taking a holistic approach means that you miss out on the synergy offered when structuring a client's affairs with complementary financial products.

2) To ensure that your financial plan is appropriate for your current and future circumstances.

What I mean by that is that each client is different and that I believe there is no 'one size fits all' approach. Your plan should take into account your current arrangements, life's goals, attitude to risk and capacity for loss. The last two items are very important because some clients are risk adverse and as an adviser you must take this into consideration when you consider how best to reach their life's goals. For example if a client wants a pension income of x, and you can achieve that goal with less risk (and therefore less returns), then it may be appropriate not to chase 'market returns' for that client.

3) Access to specialist tools and knowledge.

For example we use psychographic risk profiling from Oxford University. In conjunction with that we use stochastic modelling for efficient frontier analysis of a client's entire portfolio and lifetime cash flow modelling tools. I would suggest that these tools, while absolutely essential to creating a good holistic plan, are out of reach for most retail investors. Furthermore there are many financial products that may be appropriate for a retail investor within a wider portfolio, but they are simply not marketed to the wider retail market (intermediaries only). One last point, we have a team that includes several domain experts covering different areas such as tax and pension transfers. I highly doubt that a typical retail client would understand, keep up with, and be capable of legally mitigating their tax.

UK Regulation Has Raised Standards

Post the UK regulator's (Financial Conduct Authority or FCA) shake up of the adviser market with the Retail Distribution Review (RDR), huge changes have occurred in how advice is given. Part of this is that from the beginning of next year commission from financial products will be switched off and adviser/product charging must be completely transparent. If UK advisers were to carry out the self-serving advice offered by US "advisers" they would fall foul of UK regulation and face huge fines and a ban from the industry.

Another interesting point is that the FCA now require evidence of ongoing servicing of a client or an adviser will be forced by the regulator to hand back all remuneration paid by the client to the adviser. Quite frankly if you are not demonstrating value to a client for the fee you charge you will likely loose the client anyway.

Closing Thoughts

Good financial advisers in the UK have already switched over to fee based business models many years ago and have been in line with best practice anyway. Raising the minimum standards, while painfully implemented by the regulator, has ultimately been good for clients who can afford advice. Unfortunately there have been unintended consequences and as a result it has made advice more expensive and inaccessible (that is another story).

Finally I would say that yes, there are bad advisers out there and you should be cautious. However there are good ones out there too and I truly believe in the value proposition that a holistic approach offers to clients.