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Neil Liversidge: How direct salesmen turned the tables

Neil Liversidge

Independence is much in the news of late. Until a short while ago the regulator appeared keen, if not to actually eradicate independence, to prevent any firm from so describing itself. Thankfully, common sense eventually supervened. The latest threat seems to be the hoovering up of independents by the likes of Standard Life in the race to be the next St James’s Place.

In this first of a short series of articles, I shall try to give you my estimate, based on my own experiences of the last 36 years, as to how we have arrived at where we are today. I shall try also to give you my best estimate on where this particular industry trend is going.

When I interviewed at Hill Samuel Life Assurance in January 1980 aged 16 for what became my first job as a quotations clerk (rate books and a calculator – no computers) it was explained to me that IFAs – brokers as they were then known – were king. The only way Hill Samuel would be able to stay in business and keep us all employed was to keep them happy. Therefore, I had to do quotes quickly and accurately. Ideally, I should also throw in plenty of bowing and scraping. Failing that they would use a competitor. 

Being “independent”, I was told, there was nothing to force them to use Hill Samuel. That seemed logical enough so I naively asked “in that case, why doesn’t Hill Samuel just employ people to sell its products direct to the general public?” This provoked much spluttering by the chief clerk doing the interview. He patronisingly explained that such people were known as direct salesmen and that nobody trusted them because, unlike brokers, they were not independent. Everyone regarded them as a lower form of life, he said. Everyone, apparently, apart from Hill Samuel’s senior management. 

I shortly discovered they were building up just such a direct salesforce entitled Hill Samuel Unit Life Services, or HSULS, generally and snobbishly referred to in the broker division by the unflattering anagram “Slush”. The salesmen themselves were treated pretty meanly by the broker division. In the Leeds office it was felt insult was being added to injury by HSULS being allowed the use of a desk and phone.

Personally, I have always believed in being nice to people on the way up and had enough sense to practice that philosophy even at age 16. I made their lives easier when and where I could, mainly by doing their quotes fairly in turn. Doing so meant risking the wrath of the chief clerk.  He preferred to keep bouncing them back to the end of the queue behind any broker quotes that came in. It paid off. Fifteen years later when one of the most derided HSULS salesmen who had made a success of himself gave me a job.

It paid off for Hill Samuel also. Within a very short time the direct sales force became HSLA’s main income earner, far outstripping the broker division for all its airs and graces. One of those direct salesmen, if I recall correctly, was my old friend Harry Katz. I had had my first experience of the ambivalence (I will be kind and not call it hypocrisy) that then and now surrounds the concept of independence. It would not be my last.

Neil Liversidge is managing director of West Riding Personal Financial Solutions

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. Just to put you straight Neil. When I worked for Hill Samuel (for 2 years) it was before regulation. I used other firm’s products that I felt were superior (when appropriate) when I was there. (Put through a broker friend).

    I joined HS for their excellent training – not through any conviction. I left as soon as I felt I knew enough to be of some value elsewhere. I always intended to be independent from the very first day, but never having been in financial services and indeed having my erstwhile secretary ensuring that these salesmen never go near me – I had a steep learning curve to overcome. HS was merely a step in my ultimate direction.

    I joined the broker to whom I referred earlier and proceed when there to take every exam that I could find. In those days (after going round a couple of exhibitions) I decided that the most appropriate courses were offered by the LIA. When I had attained Fellowship by examination, I then left the brokerage to start my own firm as I thought that perhaps I was now well informed enough to do so. Of course it never works out like that and so over the following years more and more exams presented themselves. AFPC, Sofa, CFP, Mortgages and so on culminating (for me) with CISI.

    So I’m afraid your journalistic swipe is some way off the mark. I have always been firmly wedded to independence and indeed my 2 years as a tied agent merely reinforced this conviction. So at least I am able to eschew it with some direct experience.

  2. “When I interviewed at Hill Samuel Life Assurance in January 1980 aged 16 for what became my first job as a quotations clerk (rate books and a calculator – no computers)…”

    Luxury! When I was a lad we ‘ad abacus and woe betide anyone who got it wrong. But try telling that to the young today-they’ll never believe it…

  3. Neil, are you saying that ‘Independence’ is a sham and that people would be much better off with a ‘tied’ company such as Allied Crowbar, the Banks and Building Societies? Or are you saying that if you position it right and have enough infantrymen, a Direct Sales Force will always do better than using a Professional Independent Adviser?

  4. @Ted, I read it as Neil saying that having your own salesforce is far better as a provider; he makes no comment about the effectiveness of the advice to the customer. This was demonstrably the case prior to regulation. Regulation has made big successful direct companies easy pickings for regulators looking to appear like they are doing something whilst extracting juicy fines.

    In a big organisation there will always be some rogues and the direct firms carry that risk along with a bank balance sufficient to make them worthy of a regulators attention. They also need to shift product and lots of it, to pay for their shiny glass and steel offices and this exerts a pressure to sell when perhaps a sale is questionable.

    As an IFA, I can sadly see that the old argument about independence barely stands. In the 1980’s it was important to be able to select the best product and there were significant differences between products and the fund management they could offer. For most business today the product is generic and the fund management is available on all platforms.

    For regular run of the mill investment, protection and pensions business, there is little that an IFA can offer compared to a direct company like SJP.

    However, the IFA’s strength, provided a sound fee agreement is in place, is that s/he doesn’t need to sell a product and therefore can give unbiased advice. The direct boys will never be able to achieve this.

  5. So from the article do I detect you are about to give up independence and this series of articles is you trying to justify this poor decision?

    Alternatively if you are so dismissive of independence one may ask why you ever were independent in the first place? SJP might have suited you better.

  6. I just read the article as a piece of history and not making any judgements IFA v tied. I didn’t read it as a dig at Harry K either. Personally, I started in 1984, cold calling, selling savings plans. We were independent too but it was a sales environment, how far we’ve all come!

  7. Thomas Frodsham 12th July 2016 at 9:57 pm

    What can an ifa offer that she can,t

    The ability to set up a pension without any tie ins oh and
    The facility to source insurance companies outside a narrow panel
    The ability to reduce a premium on a protection plan
    The facility to switch fund providers if all is no going well oh and
    The facility to help clients access their funds in their entirety if circumstances change in the early years. Bit of repetition there
    Anything else

  8. Thomas Frodsham 12th July 2016 at 9:58 pm

    I meant sjp damn this soil hack I mean spell check

  9. Julian Stevens 13th July 2016 at 4:53 pm

    I think Neil’s just being a realist. Whether we consider SJP to be good, bad or indifferent, there’s no getting away from the fact that it’s a hugely successful operation.

  10. So are Phoenix, Utility Companies, Railway Companies, Banks, Water Companies etc. Just because you can fool most of the people some of the time and get away with it doesn’t mean we have to ignore their processes and charges

  11. Julian Stevens 18th July 2016 at 3:15 pm

    But, given that the FCA is apparently quite happy with SJP’s modus operandi, what can be done about it? If you’ve got the regulator on your side, you’re pretty well fireproof.

  12. Neil Liversidge 24th July 2016 at 1:38 pm

    Methinks the Katz doth meeow too much!

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