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Cicutti: Advice or sales?- make the choice

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 nic@inspiredmoney.co.uk

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Comments

There are 36 comments at the moment, we would love to hear your opinion too.

  1. Nic, rather than make a column war out of this, let me provide a degree of balance here.

    No decent IFA seeks to take advantage of clients whether existing or potential.

    Nonetheless, one of the tools at our disposal when looking for business is to prospect.

    As an example, I regularly trawl my client files looking for eareas where they have a lack which I can resolve. This could be a self-employed fellow with no income protection or a family with no family income benefit or other life cover. I even have clients who foolishly chose not to take life cover to protect their mortgage.

    By contacting them I am providing a worthwhile service which also benefits me if they agree to go ahread with a recommendation.

    In this regard I am selling. I am selling them the potential consequences of their inaction. I am selling them the knowledge that a solution exists and is affordable. I am selling them my services in solving the problem for them.

    None of this is negative.

    I have fourteen clients whose critical illness plans have paid out. Some of these I persuaded to take CI when they might otherwise have taken life cover only. None of these clients regret my approach.

    You need to accept that a blanket dismissal of selling is as foolish as direct sales force pushing whole of life as savings plans.

  2. Nic is just looking for ways to keep his column going after RDR.
    He will fill it full of vitriol over advisers who only give advice, advisers who give advice and sell products and those who only sell products. He will stir up trouble between them in order to keep getting paid for his S*** Stirring.I would rather sell myself than earn a living the way nic earns his.
    By the way I believe ALL journalists are unethical. ALL of them are involved in phone hacking and other dirty deeds. There is not an ethical one anywhere to be found.

  3. Must be mad for responding to this Screws of the World nonsense but….
    My time is fairly equally spread between many aspects of financial advice and selling. I dont think that anything we do is done without some element of selling and given the general apathy that we all have over money until we have a problem then sales skills are indispensible.
    Whenever we communicate with our clients we sell whatever message we have to the best of our ability.
    Our business is very succesful and this is a consequence of the way we use our sales skills to deliver our advice and we are quite proud of this facet of our success.
    Most of us arae awre that the trade media is very lacking in sales skills of any kind and is withering on the vine because of its almost total reliance on provider press releases or pie in the sky surveys.

  4. I actually like this article. It is sufficiently spikey to arouse the passions. I can’t say I disagree with him either. RDR can’t come quick enough in my opinion, the good ones will survive and the rest will fall by the wayside. That is what RDR was suppose to achieve and it will. The industry will be FAR better in 2013, you will see.

  5. Totally agree Nic. Since the 1980s I’ve been trying to find an “ethical” company that knows the difference between sales and advice. It’s one of the first questions I ask. Sadly they’re still around, their sales targets (especially Banks) forcing advisers to choose between having a job and maintaining their ethical standards. I have a friend who informed me that the “Adviser” selling her endowment policy said people who had taken them out were “laughing” at the payback. Cowboys. It’s disgusting and it won’t end until targets and bonus payments stop.

  6. Maybe some of those who have not purchased life insurance to cover their mortgage
    – have no dependents or
    – have a meaningful amount of cover from a group scheme

    Not everyone who hasn’t got mortgage protection is foolish – many are wise enough not to fall into the trap of buying something they don’t need.

  7. Everybody sells something -even you Nic. You sold yourself to the editor to get the column in the first place. Ever had a girfriend? Bet you didn’t advise her to go out with you. You persuaded, cajoled (personally I usually just grovelled) but in any event you sold the idea that going out with you might not be that bad.

    IFA’s, irrespective of whether they are mega qualified investment advisers or just plain vanilla, ALL sell something whether it’s their skills, their ongoing service levels etc. The sooner the FSA and the various consumer groups realise that “selling” isn’t a dirty word the better!

  8. Post RDR Product becomes less important

    But the “service” we provide IS going to be important

    So an IFA sets up what is without doubt the best service proposition out there and waits for clients to come knocking on hids door

    He waits and waits and no one does

    Why? Well That Service HAS to Be SOLD so he starts selling his sproposition and his buisness takes off !!

    To compare the industry we are in right now with selling pensions or endowments to nurses or school teachers is to turn the clock back 20 years

    It is beneath you to do so Nic

    So get Real NIC After all You ARE a salesman too and for goodness ake be proud of it because I am

  9. As an IFA of 14 years and happy to work on a fee or commission basis I have to say Nic is absolutely right. If you give good advice then there is no need to sell. Selling implies forcing something on someone they don’t need. If you advise of the need then the client will proceed, and if they don’t then at least they understand the consequences, which possibly they didn’t previously.
    I’m fed up woth hearing the anochronisms of ageing IFA dinosaurs wittering on about the need to sell. This used to be a sales industry, but those days are over. The advantage of giving advice for a fee is that you get paid regardless of whether your advice is followed or not, and that is a good thing.

  10. You are “selling” whether it is a product or a service. IFAs sell both a service to their customers and products for product providers. Customers pay for the service they receive, and product providers should pay for their products being sold by IFAs. That marketing cost will remain even if IFAs disappear.

  11. Nic

    Isnt your aversion to selling just inverse snobbery –

    Just trade dear boy well below the consideration of all us professionals

    It is also typical of a liberal narrative that demands that everyone has the freedom to make mistakes and they can go to hell in a hand cart and live in the gutter as that is their right without criticism from others and in the hope that at sometime they will realise their errors and correct them themselves.

    Sorry Nic the world has changed. There isn’t the money available from the state to fund the errors of others.

    We need more people giving basic and wise advice, narrowing the protection gap, letting the last generation teach the next

    Every time this industry protects a family that is one family that needs less help from the state.

    Unless we all want to be slaves of the state: the more this industry sells the public freedom from the state the better we will be

  12. If you are genuinely interested in, take the time to listen to your client, challenge, clarify and explain where required, and subsequently outline your recommended solution – that is advising, purely and simply. The terms ‘buying’ and ‘selling’ should not even be part of the equation. If the client acknowledges their ‘need’ and understands the solution, the product is incidental in satisfying their need, and it doesn’t have to be sold.

    How many people like to be sold to, regardless of the product? In my experience, none. Many may sign up because they have felt pressurised but then regret or cancel the contract.

    Our profession has experienced change over many years, and it will continue. I’m not going to enter the RDR debate here, but the few who are still of the opinion that products are there to be sold to their clients, are, I feel, now facing reality and don’t like what they see. I would also suspect that many are the main objectors to the Level 4 requirement.

    Only my opinion, and some might consider it overly naive, but it’s a belief that has served me well for over 25 years.

  13. So Nick, next week I get the results of a recent scan from my doctor and he tells me I have a potentially terminal illness. On the plus side however, he can offer surgery that could well cure me of the aforementioned condition. Unfortunately I have a phobia about hospitals and I am reluctant to go through surgery. My doctor then kindly informs me that it’s my decision; please close the door on your way out. I think (or hope) that my family would appreciate it if he tried to ‘sell’ the benefits of going through with the surgery before letting me leave. Which course of action would make him less professional???

  14. Neil F Liversidge 22nd July 2011 at 11:39 am

    I don’t think we’re really at odds Nic if you accept that ‘selling’ is not bad per se so long as the individual has a genuine need for what is being sold, and what is being sold is the right product and good value. 6 years ago I advised two young vets on mortgage proptection cover. Initially they didn’t want to know because they were in their twenties, professionals and mega-healthy sports-players. Until a short while ago that was still true. This afternoon however at 2pm I have an appointment to see the male to complete his critical illness and PHI claim forms. he has been diagnosed with MS and will receive £300k plus £18k per annum. He has that cover because, despite not wanting it, I SOLD it to him on the grounds that he DID need it, COULD afford it and SHOULD have it. And actually, I feel pretty good about the job I did. Funnily enough, he and his wife feel the same as no doubt his son would, if at age 7 months he could understand that he and his mum and dad were now in no danger of being made homeless or poverty stricken.

  15. advice i think…..maybe sales

  16. Nic,
    I’m not an IFA but I have enjoyed considerable success in both Intermediary sales at various levels and in leading product development teams for a leading product provider over 25 years. So i think i’m qualified to offer some observations.

    I don’t agree with everything IFAs say in these columns. Indeed i am developing a reputation for upsetting a few myself with my own challenges about fairness and value for money.

    But like so many you are missing the point here with all this anti-sales talk.

    What is sales? It is the most misunderstood of roles in my view.

    “Good” financial planning sales are about taking a genuine interest in and listening to the customer. Gaining a real understanding of their situation and their wants and needs both logical and emotional as they relate to money issues and helping them understand the difference between the two.

    It is then about reacting to those needs with proposals and allowing the customer to decide if you proposals might help and are value for money.

    And yes it is about discussing the value for money where that is in question.

    The very best salespeople do this – the bad and stereotypical salesmen do not and they do not gain or retain many clients – though i accept that some will try to mislead and if they mislead then there are processes for dealing with this.

    We are all salesmen of ideas. At work and at home. You included. And if you have teenage children you will understand the need for idea selling !

    But I’m just not sure what requirement you meet with these rants. If you believe that you’re meeting the requirements of the consumer then perhaps you are writing for the wrong journal.

    I think it was Ben Franklin who said “Any fool can criticize, condemn and complain and most fools do.”

    This is the stuff of stand up comedians bemoaning the world.

    Not the stuff of serious debate.

    Happy to engage further @ paulclaireaux@hotmail.com

  17. David Frankland 22nd July 2011 at 11:56 am

    I don’t usually comment on this stuff but here goes. We ALL sell no matter what we do……selling is a form of communication…….we all do it in order to achieve our aims be they professional or personal….be it your job or putting stuff on ebay…..
    MISSELLING is wrong… end of story…ie providing a product or service that is wrong/unsuitable and all those similar words…..

    Whether you brand it selling or not we have all asked the question…”do you want to go ahead”…that Nic is called a “close” and results in some form of action……..
    If we follow the suggestion that all we should do is advise and “not ask for the order” then nowt will happen unless the client leaps over the desk…wrestles the pen from my sticky fingers, elbows me to one side, and signs the documents………
    That happens to me every day…just like it happens to every other good IFA…….
    So if the offence is “selling”, ( NOT MISSELLING ) then I am guilty…..

  18. pre rdr, I believe to have chanced upon some decent products from ethical providers and have happy clients who come back to me and send others. Post rdr, I am really going to have to start selling my lifetime planning skills and asset management expertise really hard to make a living.

  19. Nic, go and write for the news of the world please.

  20. Must clients dont wake up with the idea of going shopping for Life Cover, CI or Income Protection or are itching to save for their retirement or some distant goal. The benefits of a financial review need to be ‘sold’ to clients, they need to understand the benefits to make them want to go through the lengthy process! once this has been sold to them you can then ‘advise’ them of areas that they have a shorfall in. As someone has already said, if you take the time to know your customer discuss the options and the implications of not doing anything there no longer needs to be a sale made and a customer will accept your advice. But I am a sales man and what I sell is the benefit of meeting me, after this if the client sees no benefit in my recommendations at least they are more aware of the options for the future and the implications of taking no action.

  21. Nic,

    As someone who is 37 and young enough to have missed all the old debacles and still have 20 years of experience I really find your copy hard to take…..I would happily exchange stories over a beer and hopefully would find you much more pleasant and no so opinionated as you appear. A closed mind is a good thing to lose.

  22. oh for the benefit of hindsight, you are a complete buffon Nic and if you think this is good journalisim then your even more of one than I thought.

    When you run a succesful IFA business then write with authority not from a very high horse and ignorance.

  23. Andrew Mallett 22nd July 2011 at 2:00 pm

    fuck off dickhead

    ring me if you want

    Paul Thomas has my number

  24. Nigel Barker-Smith 22nd July 2011 at 2:54 pm

    Another great column Nic.

    Like most contributors I appreciate that everyone is selling, but all Nic asks is are you selling advice or selling products?

    Be proud to be a product salesman, but don’t for a minute think you are a financial advisor salesman!

    In this particuualr thread, why are the product “sellers” got very hot under the collar?

    Another observation, the product sellers have all used the word “I” alot. Is an IFAs job about “you”?

    Without expressing an opinion, i notice that most RDR opposition are worried about themselves (back to the “I” again), when again the basic RDR concept is about the client who doesn’t seem get a look in.

    RDR might have it’s flaws the FSA more, but it would be very embarrassing to delay the deadline.

    Shall i put my cagoule on ready for the spittal fired responses?

  25. Steven Clemence 22nd July 2011 at 3:40 pm

    All PFS members subscide to a Code of Ethics

    http://www.thepfs.org/pages/about/standards/code.aspx

  26. Terence P.O'Halloran 22nd July 2011 at 5:11 pm

    there is no CHOICE about this nonsense if you give advice and the client takes it you have sold the solution to their problem.

    If the client does not take the advice then there is no sale and the client still has the problem.

    SIMPLES!

    Advice is part of the sales process, otherwise it is merely commentry-like your column Nic.

  27. Nic, Selling is only part of the equation. Nowhere in your articles have I noticed ‘marketing’ (forgive me if I have missed it). If the marketing is right, compliance and everything else falls into place much, much easier.

    You have to sell your article to the editor every week so you are a salesman. Politicians have to sell their policies to the electorate so they are also salesmen.

    The difference between the above examples and IFAs is that we are accountable till the end of our days for the sales we make. That isn’t even close to fair. The 15 year long stop is conveniently set aside by those who enjoy much more lenient treatment themselves.

    It would be really, really nice if people stopped seeing IFAs as a soft target for yet more ill-informed comment and abuse. And I say ill-informed, Nic because in one of your recent articles you suggested that the way an IFA operated was to find a suitable product and then try to sell it to the client. This is completely wrong. The only way to make an appropriate sale/recommendation, call it what you will, is to sell to a need. If there is no need, how can any sale be right? One can only sell to a need.

    Can I also make a polite request? Could we have some fresh thinking in your articles instead of rehash after rehash of the same old thing.

    Thank you.

  28. Norman English 22nd July 2011 at 6:54 pm

    In an ideal world I would fully agree, but this is not an ideal world. Unfortunatley regardless of how IFAs get paid, anyone who wants to be a rough adviser will get away with it for a period of time. Arguments over TEPs, split caps etc, tend to have been more a case of missled advisers, not advisers mis leading clients. I myself bought a geared TEP plan, due to the sats propvided by life offices and I may even say, knowing full well, that they were clearing the shelves.

    RDR I am alomost in agreement with, and maybe 50% towards making myself ready.

    Not sure where the lower end clients will fit in, most IFAs won’t be able to afford to give them advice going forward and most of touse who the advice most won’t pay for it. Catch 22. This is ok for the well to do and educated, what about the rest of the UK earners?

    There is one thing for sure splitting advice from sales, whilst ideal will never happen in 90% of cases.

    Wake up and smell the roses.

  29. Some very ‘passionate’ comments made re sellling/advice, IFA-tied blah blah. Its getting quite tedious and boring.
    Nic in this instance is quiet right in his argument.
    To those of you that think that by ‘selling’ your clients you are doing them a favour and without sales skills and passionate arguments for CIC, FIB etc clients may not take out etc blah blah, ask yourself this –
    How passionate are you when/ if recommending NSI and how many clients did you ring back in May when NSI re-launched the Index Linked certificates.
    The answer will determine whether you are a salesman or just a pretend adviser, and whether your’e interest is in the client or ‘whats in it for me’.

  30. I sell advice

  31. I’m with Nick on this one I welcome the day when I get paid for telling the client what he or she should be doing and don’t have to give a dam whether or not they take my advice. Trouble is I don’t see any one queuing up outside my office for this service.

    What line of work will you take up Nick when there is no financial services industry for you to criticise perhaps you can move on to psychics and mediums.

  32. In spite of some of the venom I think Nic has squarely hit the target. I am firmly in the camp of Robin Algar and Nigel Barker –Smith.

    With apologies to N B-S I will have to use the ‘I’ word.

    I’m glad to say that as an IFA of almost 22 years (yes Robin – I may be wizened but it doesn’t stop me agreeing with you!) I haven’t had to ‘prospect’. Prospecting was something that was done when working for a life office or in direct sales. And therein lies the rub. Of those devoted to sales how many have had a meaningful career OUITSIDE of financial services? Precious few I would venture. They have been infected by the old culture that (as a result of lack of wider experience) they are unable to shake off.
    In my previous (manufacturing career) I soon realised that banging on doors was a complete waste of time and not at all cost effective. As a producer of ‘real’ products the solution was to invent and patent. Thereby if the products met the demand (which they did) there was nowhere else to go.
    As an IFA who has practiced both in the North (Manchester) and latterly London I can assure you that provided you manage to attract the right clients (and if you are truly independent where better than from Solicitors or Accountants) selling is just not necessary. You provide the advice. If it is patently obvious that life cover is needed I merely point it out – if the client then doesn’t take it up – that’s his/her loss. I still get paid. I’m not a social worker on a mission. (Oh yes and I do charge fees for life cover and can amply demonstrate in the majority of the cases that I deal with how much better this is for the client as life commissions are – by and large – rather a rip off). I have often wondered how fastidiously life salesmen point out the commission that attaches to their public spirited work. I also wonder how many of the life salesmen actually ask if the client has a ‘proper’ and current will (produced by a solicitor – not a WH Smith kit)? Personally I will decline to act if the client will not make a proper will.

    As others have already mentioned I have also come to realise that the main purpose of the RDR really seems to be designed to weed out the reactionaries and those entrenched in the old methods.

  33. To Nigel Barker-Smith: You obviously haven’t read my comment on page 1.

  34. Ken Durkin has it about right. Remeber what Henry Ford said – “Until somebody sells something nothing happens!”.

    Life assurance and investment productsall have to be “sold, or if you prefer it – Explained to the client”. The IFAs job is to do a thorough fact find which will expose the “life situation” or need . He then finds a product to satisfy that need whether it be a protection plan or a savings product and convince the client that he needs that plan to fulfill his ambitions, how much it is going to cost him to set that plan up (commission or fee – either way it is a charge to the client and how he is going to pay to service that plan in the future – trail?)

    To knock the endowment mortgage is futile without knowing the full story, the plusses were that the mortgage was repaid on a certain date regardless of how many changes of house the client made. The plan was introduced to make sure that mortgages were repaid by the client’s retirement date and to avoid the scandal of people having to sell their houses at retirement date because very little capital had been repayed and they could no longer afford the repayments on the mortgage. People were moving house every five years. In the times of high interest rates and high inflation, (between 10 and 15 per cent!) The capital repaid in the first five years was negligable and what was was put into the purchase of the new house. The endowment mortgage worked fine until until interest dropped. There was a lot more in the argument, suffice it to say, no adviseer could foresee the political changes that destroyed the savings market. Remember that the All Share index only grew by 1.5% per annum over the last ten years and endowment policies needed that to be nearer 10 per cent. That is what destroyed the endowment policy, the life offices just could not make profits on investments. To castigate the advisers who recommended Low Cost Endowments to repay mortgages was always grossly unfair. To do so let the politicians and the FSA off the hook. Remember that the endowment mortgages which were “sold” in the early 1970s matured at 3 times the target sum. I know because I sold them and paid out the maturities. There are always two sides to a story.

  35. ” What Nic Cicutti fails to realise is that to be a successful IFA (adviser or planner) you need to be able to advise and sell, so please make your mind up to be in both camps, not just one or the other. People need to be persuaded to do what is necessary (sold to), because most people would rather spend their money now on holidays and the latest techno-gadget, than provide for the unthinkable and the inevitable. In fact, most people spend money that they haven’t got on these things, and that is why the country is in the state that it is! Both these skills are necessary if we are to reduce debt and the savings and protection gaps. Financial services advice (and the products which back it) is never bought, only sold, and that includes the need to pay for the advice in the first place!
    So please, Nic, get real and understand that whilst the top 10% of the population (HNW clients) do not need to be sold to, the rest do, and would you rather leave this to the banks or to genuine IFAs who genuinely care about their clients, find the need and fill it?

  36. A year prior to my being diagnosed with a brain tumour, a client and friend of mine suffered a similar, but in his case worse, type of cancer.

    Unfortunately in the years prior to this, I had been trying to get him to take out more cover. He didn’t and only had enough to pay off his small mortgage and leave a small surplus.

    I wish that I had been able to get him to take out more cover as he hasn’t worked for 3 years now and the family struggle. When I took the cheque out to him, he was delighted but actually cried when he said he wished he had taken out more cover. He told me that he realised why he needed more cover but thought he could get away with what he had. This is definately a case where I wish I had been better at selling.

    As a result of this, and my own experience, I take pride in pushing cover much more firmly. Insurance in my experience has to be sold.

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