Recently, the estimable Chris Budd and I corresponded via twitter on the damage done to the financial services, especially advice, sector by mis-selling scandals around DB transfers. Does this damage good advisers as well as bad? Is it only a few bad apples? The answer to the first question is a resounding YES. Sadly, all advisers are tarred with the same brush when scandals reach the national press. To the second question, I answer, “don’t know”. Who the hell does? The regulators sample looks terribly bad, but it is not a fully representative sample (although the reader would not appreciate the fact).
Part of the problem is contingent charging whereby an adviser might get a few hundred quid for advising the client to do nothing versus a working mans annual wage or more for advising the client to transfer. This has happened and I have been advised of cases where the advice was certainly, horribly, wrong.
Although I have a pretty thick skin I get a tad irritated by being called an idiot, told I don’t know what I’m talking about, or being another useless consultant, all of which may be true. It is just really irritating that these criticisms come from gutless morons who haven’t the courage to identify themselves.
I have spent decades working with advisers. I have run my own consultancy. I have chaired a reasonable sized IFA. I have qualifications and more advanced qualifications than 95% of advisers, but that qualifications are irrelevant if one has no judgment.
If you spelt out the DB transfer contingent charging dilemma (I get very rich quick by giving flawed advice or risk penury by being honest) to the woman on the Routemaster crawling down Oxford Street, you don’t need to be a clairvoyant to know how she will respond – the so-called court of public opinion.
So how could the advice sector improve its reputation with the public and improve generally? Obviously, I don’t know. However, I reckon some of these suggestions would help:
- I would love to see advisers condemn bad behaviour by other advisers ruthlessly. Don’t condemn me or other commentators for criticising bad advisers. Hit them twice as hard yourselves. Let the world know you detest such behaviour.
- Put yourselves in the customers’ shoes. Imagine the customer is your mother, sister, nephew or best friend, utterly objectively. Do you seriously believe you could justify the case for contingent charging as mentioned above to an intelligent and numerate person outside the industry? If you really believe you can, I suggest you should be very wary of men in white coats!
- Join in serious industry forums. Whenever I am in important industry groups working on the most serious of issues, it is advisers who are missing. There are those that say products are irrelevant to so-called life planners. Whatever name an adviser goes under, she or he will be using and relying on products – platforms, tools, and, yes, the output of fund managers and life companies. Every day. So, get involved (or don’t complain at the outcome!)
TISA, for example, is a relevant industry body talking to the regulator, the government generally and treasury specifically all the time, addressing issues that concern you – advisers.
At one meeting, it was suggested that ‘distributors’ take part. TISA, like the FCA calls advisers ‘distributors’. Sadly, they call platforms ‘distributors’ too! Doesn’t help.
I said I would try to get some advisers involved. I failed to interest a single one.
If you wish to live in splendid isolation and let grown-ups make all the decisions that impact on you, your business and your client’s interests, just carry on ignoring what is happening in your industry. Firms such as SJP have extremely close relationships with the regulator. All the big networks do. Does it work to their benefit? I will let you be the judge.
Finally, I would like all advisers who comment in blogs, on twitter, in trade mags etc to imagine that their clients may read what they write. It may not happen, but you can be assured that the regulator reads much of this material; consumerists read it and, because of social media, many non-industry folk (who might just be your clients) read some of it. I am not suggesting that all such comments are bad or ill thought. There are many, many who write great stuff that would pass this test. Sadly, there is much written that doesn’t’.