The recently announced threat to Germany’s AAA rating is a reminder of the importance of “labels” and how they influence the image of a country, firm or, in some cases, individual. The impact on Jimmy Carr of his tax arrangements is a striking example of the latter. The implication of these two cases for advice firms is clear – pay attention to the labels that are important to clients and make sure you can explain the labels foisted on you by the regulator.
Starting with clients, which is always a good move, the most important label is “chartered”. That is not to diminish independent or certified but to recognise there is a cache to chartered which implies personal service to a professional standard.
All the research on client selection of advisers has credibility at the top of the list and this single word is enough to get a tick in the box for most clients. This will be a point of competitive advantage for the next three years and then an essential hygiene standard thereafter. It is likely to be more important than independent or restricted because it is the quality of advice that clients are really interested in.
This leads us neatly to the new labels that we must live with from the beginning of next year. Much has been written about independent, restricted, simplified and specialist. Within the industry, we know what they mean but how we explain them to clients is far more important. Many firms are finalising their client proposition (what you do and how you do it) ahead of the RDR deadline and practicing how they will use it to substantiate their prices. You should pay as much attention to explaining the regulatory labels and ensure that they do not present a barrier to be crossed before you can begin the serious business of giving advice.
David Shelton is the author of The Business of Advice book and website www.businessofadvice.co.uk