It was to be expected really. No sooner had I written about the dangers of selling financial products than a wave of comments followed from IFAs who not only believe it is a vital part of the advice process but also feel they have failed their clients because they did not sell hard enough.
In addition to the 40 or so comments posted on the Money Marketing website, another 30 or so found their way into my email inbox last week.
Predictably, many of the responses focused on variants of stories that either involved grateful clients thanking their lucky stars that they had listened to their advisers’ sales patter and took out shedloads of insurance, or they didn’t and suffered the consequences.
Somehow, I mysteriously failed to spot any stories of the nurse or teacher who was eternally grateful to their adviser for flogging them a personal pension and transferring them out of their occupational scheme.
Or the millions of homebuyers who listened to the sales spiel of their advisers and took out a with-profits endowment to help pay off their mortgage – which they then surrendered for less than the contributions they had paid in over the preceding years. Alternatively, if they carried on paying into them these products stand no chance of paying off more than a fraction of the homeloans they were intended to settle in full.
Then there were tens of thousands, mostly elderly, investors who were lured into risky split-cap investment trusts and lost hundreds of millions of pounds. Yet no one has proudly stood up to tell us how glad they were to have taken part in that particular selling exercise.
Funny that – and how naive of me to dare to suggest that treating your clients like mugs with so little understanding of financial issues that they need to be treated as if they were idiots is not always a great move.
OK, so this is clearly an issue that lots of readers feel strongly about, hardly surprising really, given that for so many of them the entire experience of working financial services over decades has been based on a proposition that sees the selling process as central to their relationship with clients.
I remember once profiling an IFA for this paper a long time ago and he told me how he had set up what turned out to be a highly successful business in Belfast, his home city.
Basically, it was all down to prospecting, knocking on thousands of doors over a period of years, asking if he could speak to the man or woman “in the house” and then trying to sell him a financial product. If the punter said he was busy right then, the IFA would nod understandingly and then arrange a more suitable time to call round.
In time, this adviser built up a large number of customers, to the point where he no longer felt the need to knock on doors. People started to come to him, either the ones whom he had originally sold to or others recommended to him by his initial clients.
Realistically, there is not a cat’s chance in hell that someone like that, who dragged himself up the hardest way imaginable for any adviser, is ever going to say: “Selling is a terrible way for any IFA to build a business.” And anyone who in recent years went through even a fraction of that man’s experience in financial services will feel that selling is an essential part of how to deal with a client.
So I fully accept that it is incredibly hard for anyone to let go of that entire ethos and replace it with one in which advice is given and discussed in a mature way with the client – including areas where he or she may be underprepared in terms of the protection they need or investments they may need to make in respect of their future retirement needs.
But unless advisers start moving in that direction some time soon, they will never be in a position to realistically implement key aspects of the RDR.
After 2012, the onus will be on genuine IFAs to show their clients that they are not simply after making money by flogging products. That, after all, is part of the desperately needed process of re-establishing credibility with potential clients. So for everyone who continues to defend past practices even when, in many cases, they failed to meet the needs of millions of people in the UK, you really are missing the point here.
And another thing – to the nice senior Million Dollar Round Table person who emailed me to stress the standards of excellence his organisation holds dear to its heart – and then tells me the organisation’s “production requirement” is a starting point to achieve these standards, I have to ask: why is it necessary to do so by means of proving how well you sell? Why are you defining what is “best in the industry” as an ability to sell more than everyone else?
Over the years, I have met many successful salespeople in the industry. I have also come across some fantastic advisers and financial planners. Occasionally, the two will overlap but overall my experience teaches me that most people are either in one camp or the other. Time to make your mind up.
Nic Cicutti can be contacted at email@example.com