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Lost for words

The extraordinary Texan, Lance Armstrong, has just won his seventh successive Tour de France.

His earlier courageous battle with life-threatening cancer was just an obstacle put in his way. Such courage was epitomised by his inspiring words: “Pain is temporary, giving up is permanent.” The power of just a few words in motivating us, entertaining us or informing us fascinates me.

I want to reflect on words which inform us. Most of us will have shelves piled high with technical research, study notes, informative magazines and books of data. We need these to do our jobs.

These days, we are obliged to share a great deal of written information with our clients. The purpose is to enable clients to make informed choices on the suitability of advice.

However, the ton of paper for a simple transaction is a lot of data. A 30,000 open-market option results in the client receiving a business card, terms of business, key facts about our services, key facts about the cost of our services, a fee agreement, an illustration, key features, some marketing blurb, a suitability letter and his consequent hernia. Then there will be post-sale information including a policy document.

Little wonder clients feel overwhelmed with detail. It is a lot of paper. I know it is as much to protect advisers from misunderstandings as it is to inform consumers but is there an alternative?

Clients tell us: “It is just too much information for me to want to read it.” But it surely cannot be the number of words used to give the required warnings that is the central issue? After all, there could not be a shorter message to consumers than “Smoking kills” but it is not stopping 13 million UK citizens from putting the poisoned weed in their mouths. There could not be a clearer message emblazoned in big lettering on every cigarette packet.

Is the key, therefore, not the number of words but whether the public are interested enough to want to take notice?

Can we shorten our own messages? Of course we can. “Failing to save damages your financial health.” “Will your money run out before you do?”

But it really is not as simple as that. The client needs to have a piece of paper that sets out our status. That is because, just as the public were beginning to understand the difference between tied and independent advice, other forms of tied advice were created. Multi-ties, whole of market advisers. Hey, and guess what, the same man or woman could be independent for some work and wear another type of hat for other work. Confused? Never mind. Two sides of A4 paper headed, Key facts about our services, will resolve that.

Clients might ask: “What is the difference between independent and whole of market?” Ah, good question. The answer is in how they are paid. Independent advisers have to offer a fee option, which is explained in a three-page document headed, Key facts about the cost of our services.

Then there are illustrations. Clients might say: “How come you produce projected values for a pension plan but not my investments?” It seems to me that illustrations raise public expectations and that the consumer does not always understand the difference between projections on assumed rates of growth.

I think we should be concentrating our efforts more on regular client reviews with valuations, rather than on how performance measures up to an illustrative value, where the assumed growth rates have often changed.

So what about all this paper? If we are in the advice business, information is key. All I would ask is that there is a review of everything we are obliged to give clients and we try to rationalise the totality of what has been allowed to accumulate. In short, we should be looking at it from the client’s point of view.

If the impression given is that “Financial services bores,” that message will have no more impact than “Smoking kills” and we can expect that the information we give to consumers will be treated with equal disinterest.

Until then, to coin a phrase, I will accept that the pain is temporary.


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