View more on these topics

Jason Butler: There are no bad advisers – just bad advice firms

No one ever goes to work aiming or expecting to do a poor job. While everyone has different beliefs, motivations, communication styles, skills and experiences, I firmly believe most people want to do their job well.

There is a lot of research to support the notion that people need more than just money and other financial benefits to be motivated and enjoy their job. Having a strong sense of purpose and deriving pride and satisfaction from their work have been shown as extremely important factors to high-performing staff.

A company’s culture, in terms of what it stands for, the standards it sets, the things it will not tolerate and how it treats its customers and staff, sets the tone and context from which staff take their cues.

One of the easiest ways to create a great culture and a great business is to genuinely put the client at the heart of everything your firm does.

Processes, pricing, staff training, communications, advice models, technical knowledge, technology, marketing and compliance are all the operational components that enable a firm to deliver on its promises, but it is a laser like focus on key outcomes that give a business its raison d’être.

If a business focuses on key outcomes, it is more likely to be delivering things which clients value. Interactions are likely to be more enjoyable and work will get done to a high standard, on time, every time. The firm is also likely to be very efficient, and very responsive to client preferences.

Sadly, I see far too many advice firms which are not operating with an outcomes based focus.

Instead they are inward looking, seeking to defend outdated practices, doing what makes their, rather than their clients’, lives easier.

They do not anticipate or consider how technology can make their clients’ lives easier or the firm’s fees lower.

They do not think properly about how to minimise potential conflicts of interests.

They do not think about how they can get the client more involved in the financial planning process.

They let compliance rules dominate their business and operations thinking rather than taking them into account as just one of several factors to consider.

Most firms do some things very well but my experience is very few firms do everything very well.

If you want to be a progressive firm you need to go way beyond creating a mission statement and service standards. Instead I believe you need to look at your service critically in terms of the following five key outcomes:

  • The tangible value that you deliver in terms of financial outcomes and how you make clients feel
  • The quality of the client experience in the form of all their interactions with your firm and its staff
  • The sustainability and resilience of your business in the sense that you are profitable and will still be in business in the long-term
  • The ability to attract and retain high quality staff who, even with the best technology, are essential to great service
  • The impact your firm has on society in terms of employment, financially stable clients, capital provision for the economy through investment portfolios and contributing to the tax base

I really believe there are no bad advisers, just bad (or not as good as they could be) advice firms.  It’s no secret that great people work for great firms.

Jason Butler is a financial services entrepreneur and former financial adviser. Follow him on Twitter @jbthewealthman

Recommended

Business-People-Silhouette-Leaving-Walking-700x450.jpg
3

Advised clients £40k better off than unadvised, study finds

A report into the value of financial advice has found that those seeking help from an IFA were better off by an average of around £40,000 compared to their unadvised peers. The findings from the International Longevity Centre think-tank show that the benefits of advice applied to both the ‘affluent but advised’ and the ‘just […]

How can I help develop my professional connections?

Graeme Ballantyne, business consultancy manager, looks at how you can maximise the opportunities through your professional connections As we move through the summer months it’s perhaps a good time to pause and reflect on whether the plans you’ve made for your business are bearing fruit. One area we at PruConsulting know many advisers have been […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 15 comments at the moment, we would love to hear your opinion too.

  1. Based on experience there are three types of bad adviser.

    1. The person who doesn’t care about clients and is only in it for themselves. Clients might get good advice if it works for them too.

    2. The outright crook and fraudster.

    3. The incompetent adviser who thinks they are doing a good job but aren’t. They don’t aim or expect to do a bad job but they do.

    There are good and bad firms but ultimately the advice is given by an adviser, not the firm itself. A good adviser in a bad firm will still do right by the client. A bad adviser in a good firm will still result in bad client outcomes (though hopefully not for long).

    Belief and evidence are two different things…

  2. I have to disagree with the sentiment that there are no bad advisers just bad firms. I’ve had the pleasure to have worked with advisers that I consider to be brilliant and some that have been terrible whilst in the same firm. The firm has been excellent also and as such, those advisers don’t last long…

  3. What a complete load of crap.

  4. Neil Liversidge 14th July 2017 at 12:22 pm

    ‘I really believe there are no bad advisers, just bad (or not as good as they could be) advice firms.’ If you believe that, you’ll believe anything. I know many firm owners who’ve been let down in various ways by advisers whom they took on in good faith, supported, resourced and generally treated well. Like the guy who came to us blathering about how his Christian beliefs would only ever let him put the clients’ interests first, but who left shortly afterward because we wouldn’t let him rip and churn and burn. Or the one who we gave a break to when he was down on his luck who then tried to leave us with a load of his clawback liabilities. There are good advisers in bad firms and bad advisers in good firms. The good advisers need to escape their toxic bosses pronto. The good firms need to spot the bad apples early and cull them mercilessly, for the sake of their other staff and clients as well as themselves. Bad staff only get away with it thanks to weak managers. Every person we recruit gets told the BL / Rover Cars story, the moral of which is that bad workers make good workers unemployed. The net result is that we have a fantastic staff and a team in the truest sense of the world. Nice theory Jason, just not the reality, unfortunately.

  5. There are also no bad:
    Journalists, MP’s, Care Home staff, Police, Teachers, Scout Masters, Media Personalities, Footballers, Judges, Lawyers, Local Councillors, Directors, CEO’s.
    Another negative article from the MM bowels.

  6. Not one of your best pieces Jason. Perhaps you never came across the cowboys or those that had been thoroughly fleeced…. there are bad apples in all walks of life… the evidence of bad advice over the last 30 years speaks for itself. Now we have the spectre of DB transfers looming over our collective FSCS funding levies…as well as the usual junk in SIPPs – the proverbial empty box rental business…worryingly like an ENRON replay.

  7. The chap I came across with 27 onshore bonds totalling nearly 2 million quid that were re-broked every 5 years (so every couple of months a new one was up) certainly had a bad adviser.

  8. The announcement today that a compliance officer is being held personally liable for his failings is a step in the right direction.

    Both firms and advisers should be accountable for what they do and neither should be able to hide behind the other, as has been the case until now.

  9. What is a financial services entrepreneur ?

  10. The point is that financial advisers are paid by commissions as Agents for their Principal – The Insurance companies whose tardy reputation means they influence the sales by manipulation of commissions. The maximum commission agreement was useless as a result. Financial Advisers want long term business relationships – something the FCA does not understand probably because they have a background or ex career with an insurance company. Financial Advisers are Brokers they find a suitable appropriate deal for their clients – because insurance companies offer different levels of service to their different yet Segregated Agents. Some advisers are Greedy for money and have no care about retaining clients – But the principal for this agent is responsible – to ensure proper quality of Care – But they are on bonuses or commissions and are Greedy and do not take their Duties or Responsibilities seriously. This is one reason why the FCA blames advisers – by being complicit with their principals – but then they might need a another job ?

  11. Neil Liversidge 16th July 2017 at 9:21 pm

    I just read this again. Jason, did you eat a ‘Buzzword Bingo’ card before you wrote this? The last time I saw so much management speak crammed into such a short piece was in the dying days of DBS circa 2000-2002 after the ‘Invasion of the Bodysnatchers’, AKA the takeover by Misys!

  12. It’s a bit like saying there are no bad drivers, only bad cars.

    BTW Neil ~ I thought you said that you/your firm never takes indemnity commission? Yet you appear to have allowed your advisers to take it.

    • Neil Liversidge 17th July 2017 at 10:59 am

      Oh dear Julian, wrong again! You do make a habit of it, don’t you? We took on an adviser – an old friend and former colleague of mine – whose own business had become non-viable with the demise of the mortgage market in 2008. He novated his stuff over to us and with it a large indemnity liability. We gave him a platinum deal – letting him keep 100% of his trail while he got back on his feet. He was meant to generate new business – on 100% NOn-indemnity terms while with us – but instead used us to babysit his clients while he passed his exams. We gave him a good deal on that as well – a 65% payaway. In the event, he did virtually nothing via our firm, apparently begrudging us even the small share we were due. Then one day he said he was leaving, which was fine – no great loss. He asked if we would novate all his stuff back over to him at his new firm. We said fine, no hard feelings, off you go. So he brought in a bunch of novation letters for me to sign, which I did. He wanted to post them himself “To make sure they went” which I found mildly insulting, but said nothing and let him take them to post. Then we started getting clawbacks. He’d novated his investment stuff with trail but not sent off the letters novating the life contracts which had his old indemnity liabilities on them and which he now was apparently re-writing with his new firm. Anyhow, I pointed out to his new firm that this was not a good trick to pull given the code of ethics etc., and sensibly they agreed. We got a refund and the rest of his indemnity got novated back to him. So there you go Julian, we ARE 100% NON-indemnity. Now go away, do some work, run your own business, and stop stalking me.

      • You made two mistakes Neil. Firstly by taking on somebody else’s clawback exposure and secondly, when he was leaving, by trusting him to despatch to the providers the novation letters he’d signed. That, to my mind, demonstrates poor commercial judgement. I wouldn’t have done either. But, hey ho, you’re always right so let’s leave it at that.

        • Neil Liversidge 19th July 2017 at 12:15 pm

          I trusted a guy I’d known for years. I generally find that if you trust people they live up to it. That is my preferred approach. Sadly some don’t and when they don’t you deal with it as I dealt with him. Whilst I prefer to see the best in people and treat them accordingly, does not mean I am soft. I am perfectly capable of unleashing thunderbolts when I need to. Anyhow his misjudgment was his loss and a BIG mistake as he subsequently realised, when I pointed out the implications to him and his new firm. As for my commercial judgment Julian, the measure of that is the considerable success of my business. Nothing I have seen of you, or your business, on the other hand, leads me to believe I should place any weight whatsoever on your opinions of the same.

Leave a comment