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MM leader: The ‘adviser says no’ mentality on insistent clients

The idea of “insistent clients” conjures up the notion that long-standing clients will somehow morph into unruly teenagers who won’t do what they are told.

Clearly that is not the case. But neither are advisers jumping the gun here.

Advisers are right to be agitated about the lack of clear regulatory guidance about how to proceed when someone wants to carry out a pension transfer which is unlikely to be in their best interests.

Privately, Money Marketing has been told that regulatory bodies are themselves frustrated about how the treatment of insistent clients complaints has been characterised in public, and that messages meant to reassure advisers have been distorted.

And yet as advisers’ anxieties grow, so too do the concerns of the companies ultimately standing behind the advice – the professional indemnity insurers. On top of the shock news that life and pensions advisers will be hit by a £100m annual Financial Services Compensation scheme levy, advisers now face the prospect of fielding any insistent clients complaints without the backing of their insurers.

The heated debate around insistent clients boils down to two key themes. Firstly, we seem to have found ourselves arguing the toss once again about how much weight execution-only disclaimers actually carry. For what it’s worth, previous experience tells me the Financial Ombudsman Service is likely to look at the spirit in which such disclaimers were signed, rather than the mere fact the document exists.

Secondly, what should the role of the adviser be in insistent client situations? How much is an adviser supposed to safeguard clients’ interests, rather than simply facilitate their wishes? Should advice firms adopt the role of parent, where no means no, or a good careers adviser, where choices are set out in the most meaningful way possible, with the ultimate decision left to the individual?

There will be advisers who will not want to touch insistent clients with a bargepole, and they will have their own good reasons for doing so. There will also be advisers who proceed, after much time invested in explaining the options.

Each camp will be able to argue robustly why their chosen course of action is “best practice.” But there may be something to be said in favour of moving away from an “adviser says no” mentality in order to work with clients on the best way forward.


Natalie Holt is editor of Money Marketing – follow her on Twitter 
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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Yesterday I turned away an insistent client.

    He was sent to me by his accountant. He has £80,000 in a Royal London pension and told them that he wanted to take the lot as a cash sum to buy a property in Bulgaria.

    They sent him a form to be countersigned by an adviser and told him they would not deal with it without a countersignature.

    He expected me to sign it, probably anticipating a £50 fee, as with solicitors countersigning.

    I told him that I wouldn’t sign it even for a £1,000 fee. The risk that he would later regret his actions and them go to the FOS was a risk that I was not prepared to take. I suggested that he would be hard-pressed to find an adviser willing to shoulder that risk.

    I left him about to remonstrate with Royal London on the basis that it was his money and he could do what he liked with it.

  2. Julian Stevens 8th May 2015 at 4:38 pm

    Even if Royal London were to waive their requirement of an adviser counter-signature, the client would probably still try it on with them in a few years time when he finds himself struggling to make ends meet. They shouldn’t have let me do it, he’ll claim. They should have insisted that I take advice. I’m just a simple man and didn’t really understand what I was doing. So where will he go and what will he do if he can’t find an adviser willing to countersign and the provider won’t budge? Complain against the provider for preventing him from doing what he wants with his own money? What will the FOS decide? Who can know? Toss a coin.

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