If you are settling down to read this in a packed office, please pause for a moment, glance around at your colleagues and, for the purpose of this brief experiment, place them into one of two categories. Category one is “predominantly a salesperson” and category two is “predominantly an adviser”.
In the red corner is “the salesperson”. He or she is most easily recognised by their appearance but also, generally, by their attitude as they vocalise endlessly on the merits of being a self-starter, of good time management and constant personal improvement.
They preach endlessly from a range of self-help mantras on the virtue of remaining positive – this can be summarised to the uninitiated as an almost pathological optimism in the face of even the most contradictory evidence. This, coupled with the oily charm of a garage forecourt, is a familiar sight in financial services.
In the blue corner is “the adviser”. This individual has perfected the art of the sneer. Two words that will immediately summon forth this particularly facial contortion are “commission” and “selling” but they will usually substitute words such as “remuneration” and “advising” to avoid the demons deflowering their inner soul with shame and misery. They will generally respect a G60 pass far more than a £10,000 case and will always make an argument for National Savings products and insurance Isas, even when nobody else will.
I do have a point. These caricatures are probably the only part of our industry that will remain polarised after CP121.
It is still true that, for a great number of people, financial services represent a second bite at the cherry – a default career brought about by circumstance. Anyone involved in recruitment over the years will relate to this and we have all shared an office with individuals and questioned how and why they got as far as they did. I always felt a little uncomfortable when my district managers presented me with individuals for whom the height of previous employment benefits was a free polyester tie.
What exactly is “the ideal candidate” in 2002? Can there be one? Is it a “salesperson” or an “adviser”? Are IFAs better by definition than tied agents? This is not clear.
All the arguments against polarisation and, indeed, many of those for it, seem to me wholly unsatisfactory. To the “salesperson”, products are best commoditised. There is your protection plan, your pension, your bond and your Isa, now get out there and sell them. This brings out the “adviser” in palpitations together with all the external symptoms of the latter stages of the Ebola virus. He, of course, needs a ridiculously cumbersome computer system to analyse and reanalyse enough possibilities to produce an analysis thick enough to get nods of approval from any compliance sign-off. He wants to deal in “solutions”, not “products”.
My point is that neither of these approaches necessarily does clients a service or a disservice. I have heard plausible arguments from “salespeople” that a whole-life contract from Standard Life is better value than a pension and, indeed, the argument that Isas are always better than FSAVCs from “advisers”.
Be careful. If you carry on digging, you will find yourself standing on the brink of yet another great post-Newtonian philosophical question stemming from the very meaning of humanity – what exactly is best advice? It is a nonsense, surely? I believe its definition can only really be established with hindsight. Therefore, it follows that all “advisers”, or “salespeople”, are only ever involved with risk management or damage limitation, depending on which side of the benchmark your results are.
The fact remains that we are all of us forced to respond and dance to the tune of regulators which are driven by Governments chasing votes, financial media chasing readership or litigious clients chasing recompense. They are trying to do an impossible job.
My solution is simple – it is betting slips. Every key features document should incorporate a small yellow carbonised slip on which the client writes his desired financial outcome. The “adviser” or “salesperson” can then write the odds of success based on a regulatory table. Oh yes we must have a regulatory table.
“Financial independence at 60 – 7/1”. You get the idea. This will immediately allow the client to see the adviser or salesperson fairly. I do not imagine many people are suing Templegate for getting the Grand National winner wrong. Is it fair to expect any financial services professional to be able to predict the future accurately from this day forward?
The “salesperson” will argue that it does not matter which vehicle you save into, as long as you save. This justifies selling bonds to non-taxpayers, endowment savings plans as always tax-free and avoiding investment trusts and drawdown like the plague.
The “adviser” will fall back on charts and theories based on retracement principles and Fibonacci numbers until he can demonstrate that there is, indeed, a slight difference between the contracts on offer.
Our profession is really only about imparting knowledge and providing the motivation to act. We must all stand on a technical terra firma but our equally important role is to coax the unknowing away from the sinking sands. We can throw them a rope but we cannot walk for them.
Steve Buttercase is a senior adviser at Lamensdorf Group