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Nic Cicutti: Comparing advice to second-hand goods misses the point

I have long admired Neil Liversidge. I know he does not think so, but I do. He speaks up on behalf of many “little” IFAs and does so in a style that they appreciate and love.

The fact that his views appear stuck in the 1980s is besides the point: so are those of his core target audience, making his comments the perfect echo chamber for financial advisers who bitterly regret everything that happened to them from the moment they accepted regulatory oversight by Fimbra.

So when I see a byline in Money Marketing bearing his name, I inevitably gravitate towards it, knowing I am about to learn something about the mindset of a small but important section of the IFA constituency.

Last week’s issue of the paper was no exception. In it, Neil told of how he visited a market trader, by request, at a highly unsocial time, put up with the fellow’s chain smoking and spent hours working on a product recommendation, only to be told that his potential £600 bill for going ahead was way too high.

Some months later, Neil went up to the guy as he was running his stall and inquired about buying just shy of a grand’s worth of electrical items. After the trader had stacked it all to one side, ready for collection, Neil then proceeded to ask what his profit margin was on the sale.

“What’s it to you?”, the trader asked. To which Neil replied that just as the dealer had to earn a living, so did he. Yet while insisting that Neil should disclose his earnings from the sale of the policy he had recommended, the trader was refusing to disclose his own margins. Therefore, Neil told him he would be walking away from the deal.

It is a brilliant tale, rendered all the more delicious by its finale: as Neil was leaving, the man threw a table lamp at him, but missed. I’m sure it’s all a true story. But even if it were an allegory, the moral is clear: why should advisers have to disclose the commission they earn on the sale of a financial product if chain-smoking market traders do not?

It is an interesting argument, albeit that it is 20 years too late. That particular issue was decided back in the early 1990s when a Conservative government realised competition was not keeping commission levels down. The 1994 PIA rules on commission disclosure were the end result.

What strikes me as bizarre is the fact that Neil has decided to resurrect the argument in the context of a totally separate debate to do with how much consumers should pay for advice.

He quotes the utopian romantic John Ruskin to make his point: “It is unwise to pay too much. But it is worse to pay too little. When you pay too much, you lose a little money; that is all. When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing the thing it was bought to do.”

Let’s get real. The vast, overwhelming majority of consumers do not object to financial advisers earning something from the sale of a financial product. What they want to know, however, is a combination of two things: the cost to them of the advice they are receiving and what they will get for their money, both now and in the future.

They also want to know that there is some transparency in their dealings in this market. When it was first mooted in the late 1980s, disclosure was seen as part of a process of a consumer making sense of vast inequalities between charges, including commissions, for different financial products, which had varying and sometimes crippling effects on the underlying cost of what they were buying. That still remains the case.

Moreover, it was always understood such disclosure requirements came in the context of another vitally important point: the fact that for most people there is a vast difference in terms of outcomes between taking out an investment, life cover or a retirement plan and buying a fridge. One is likely to impact on a person’s entire life, the other is simply a one-off purchase costing a couple of hundred quid.

To try and compare a set of critical financial requirements with tales of dodgy market stalls seems to me to miss the point entirely – and achieves little other than to give a few reactionary readers of Money Marketing a warm glow. Reactionaries who, by the way, would have nothing to do with any other aspect of Ruskin’s progressive thinking.

If we were really to apply Neil’s logic to the situation it would work a little like this: a dealer came to see me the other day. He told me that he had an exciting tip for my pension. “What’s that,” I asked.

“Old electric cookers,” came the reply, “They’re bound to rocket in value over the next 25 years – and as it happens, I happen to have 970 of them going spare. Just two hundred grand to you, me old son.”

“Er, OK, but how much do you stand to make out of this deal?”, I inquired. “Wassit to you how much I stand to make, you e****g b*****d? Don’t you trust me?”

Nic Cicutti can be contacted via nic@inspiredmoney.co.uk

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Comments

There are 37 comments at the moment, we would love to hear your opinion too.

  1. Nic has missed the point of Neil’s article which relates to the dulaity of consumer thinking where nobody questions the mark up or margin on a car a can of beans or a sofa yet due to dodgy reporting and incorrect regulatory statistics there is a mindset that assumes all advisers are moneygrabbers.

    As always, this industry is singled out for treatments that other industries do not have to suffer.

    Nic’s ever-present viewpoint of ‘get on with it’ misses the point.

    Back when he was a COHSE Shop Steward I bet he was quick to try and right the various wrongs that he saw.

  2. No I refuse to read Nicky boys weekly drival !!
    Someone needs to make a stand.

  3. Morning Nic,not sure you have made too many friends amongst the market trading community,it would appear that if the comparison had been made in connection with an ‘acceptable’ occupation perhaps you may not have had cause to pen your response.I would be most grateful if you could publish a list of ‘acceptable’ occupations to which we can fairly make comparisons.Financial journalists? not sure which column they will appear in.

  4. As a reader, I think I would be more interested to know how much Mr Cicutti gets paid for writing this unbridled tat

  5. Does Ciccutti get paid for writing that? Old rope and money anyone?

  6. The point that Nic seems to be making is that the greater the complexity of a product then the greater the safeguards need to be. Financial products can be very complicated and therefore RDR is seeking to introduce more safeguards by raising the standards of advisers, and at the same time making financial products clearer by not having hidden fees and charges. We can argue about how the FSA are going about this (and I think that there are easier ways) but I think the aims are something to be desired.

    I think this is the point that Nic is trying to make but I cannot see the relevance of the story he finished off with.

    Perhaps Nic should stick to the point of RDR which is to keep things simple and straightforward and not use irrelevant analagies.

  7. Yes Nic, you are right. Some of us still don’t get it. We should be providing a service not selling products. We should be paid for our time and expertise and not be dependent upon completing business. The story with the market trader wouldn’t have happened to me. For a start, I know some do well, market traders are not my target market! Supposing I was there he would have got half an hour to establish if there was some common understanding then maybe another half an hour to get facts. If I felt he needed my advice, which amazingly not everyone does, he’d be told just to put pen to paper would cost him an initial £500 fee. If he was not happy with that I would walk away without a care in the world. Too many of us are still think there has to be a product produced at some stage. I am currently engaged on several client projects where there is no product outcome but the clients are happy to pay for my services having already agreed to do so before my acting on their behalf. We need to think about adding value not selling products. Anyone who can’t do that should seriously consider their future in this business.

  8. I agree with Alan’s comment regarding consumer thinking; this is the point I believe Neil was making. I for one am weary of hearing “pub talk” in which it seems that it is not acceptable for advisers to be able to make a living from what they do, whereas consumers would surely not expect a (plumber / solicitor / insert any other job of your choice) to undertake work for nothing.

  9. There is an age old problem here, disclosure of commission does not provide a complete picture.

    The disclosure doesn’t give the Customer any idea of an IFA’s profit on the piece of work that they’ve done, but this can be how those figures are misinterpreted.

    We all know that commission is only income, not money in the IFA’s pocket. Without IFA’s having a customer relationship, it can be a difficult sell, where the Customer has no idea of the value of the expertise.

  10. Am I the only person that actually enjoys Nic’s articles?

    An often humorous and refreshing viewpoint, I find.

  11. Neil F Liversidge 15th November 2012 at 10:45 am

    Nic, you were right about one thing – it was a completely true story. It’s a pity then that it’s you that has completely missed the point – or rather points plural. There are actually three.

    I was not actually arguing against disclosure. I was arguing firstly against the excessive focus placed on the cost of advice by the FSA. It has harped on costs and charges so loudly and so long that many customers have formed completely unreasonable expectations of what they should get and for how much – hence the appositeness of the John Ruskin quote. This is borne out by recent surveys which suggest clients are wiling only to pay paltry amounts for advice. The FSA’s agenda in this has been dictated by an absurd and obsessive belief, spiced up no doubt by some good old fashioned envy, that we all earn too much. Maybe they see a few London-based advisers specialising in ultra-HNW clients flashing around in Ferraris. There no doubt are such advisers, but they are not typical.

    Secondly I was arguing against the FSA’s unrealistic – totally barmy in fact – belief that you can force down firms’ income whilst increasing regulatory costs and still expect them to remain in business. Go back to the time when the ‘menu’ was introduced. The FSA said it’s objective was to force commissions down yet at the same time it was increasing its own charges to us as it has done pretty much every year throughout its existence, ditto the FSCS and FOS. When our incomes are forced down and at the same time all our overheads, especially regulatory costs, increase year on year, something in the middle has to give. We’re in the middle Nic, we’re being squeezed and we’re sick of it. You don’t need a degree in economics to figure out that the FSA is pursuing a course designed to exterminate all forms of advice and the number of firms going bust and leaving their liabilities on the rest of us proves I’m right.

    Thirdly I was making the point that by focusing customers’ minds on cost rather than value – John Ruskin again – they are actually leading customers towards bad decisions and worse outcomes. Nothing better illustrates the FSA’s downright stupidity in this regard than the insistence that every term assurance quote shows the total cost of all the premiums payable over the policy term – assuming of course the client lives that long. That one bit of information is the FSA’s last spiteful shot as sales prevention. When all its other efforts have failed, when customers, despite the FSA’s efforts still trust their advisors, when customers have concluded that yes, it is worth to pay premiums to have their mortgage paid off and to keep the kids from existing on benefits, we have to have that one last bit of FSA nastiness in the ‘total cost’ figure. Knowing the way the FSA thinks I am only surprised that they don’t force us to add on the end “And if you’d not taken this policy out you’d have been able to buy a new car or go on a cruise with that!” So long as nobody had died or had a critical illness of course.

    Far from being the 1980s dinosaur that you like to portray Nic, I set my firm up on a fees basis right from the start in 2004 and I deliberately engineered out all the bad practices I’d seen in the previous 24 years of working for other people. I built in a written no-churn guarantee and structures to ensure we only got paid if we deliver ongoing service. The fact that we’ve gone from literally nothing to 1400 clients, we charge fairly and get nearly all our new clients from referrals suggests we’ve got something right, buy hey – that’s what we’re supposed to do – we’re in business. Unlike the FSA.

  12. @Peter Taylor & @JF: Based on your remarks, I bet a lot of people say the same thing about your financial advice. Given you appear to have come out with such a trite response to my argument, they would be right.

    @Hugh Jarse: I thought I’d barred you from even reading my column. What are you doing, daring even to leave a comment underneath my words? Are you stalking me or what?

    @Alan Lakey: I think it was Neil who conflated two separate arguments. The Ruskin quote, stated baldly, means “you get what you pay for”. I actually agree with that principle and apply it in my dealings with all trades and professions, including financial advisers. Insofar as Neil is saying that, I don’t have a problem with his proposition.

    However, Neil then goes on to draw an additional, and in my view incorrect, conclusion. It is that disclosure of charges and of how much an adviser earns from giving a certain piece of adviceor selling a certain product is mistaken in principle. That, I’m afraid is wrong. It is an issue which, as I pointed out, was discussed in the 1980s and early 1990s and even in those barely-regulated days his argument was considered to be wrong, let alone today when we have s much more experience of how some financial advisers manage to skim thousands of pounds off clients for basic recommendations taking only a few hours.

    Given how keen you are to always draw my union past into the story, yes, I did always try and right wrongs, both as a CoHSE steward and later on, in the NUJ. I am proud of what we achieved on members’ behalf and stand by exactly the same principles today.

    I’ve also always believed in disclosure and complete clarity and honesty before those I serve, however. For example, I declined the offer of a full-time union position because I believed officials should be elected and paid the average wage of those they represent.

    In my own work today, I always tell my customers in advance exactly how much I prpose to charge and why. I explain what I’m going to do and then try to live up to those expectations. I only get paid after I’ve done the work and if they’re not happy I refuse to accept payment or we negotiate part-payment.

    By the way, there are also times when I present a proposal, sometimes working hours on it, and the client knocks the idea on the head.

    I’ve travelled all the way from London to Leeds, with a designer in tow, to meet a firm of financial advisers, worked up a detailed brief for a brochure they said they wanted, only to be told their priorities had changed and they weren’t going ahead with it, even though they liked the concept and the work. Did I/we charge them? Couldn’t be ar*ed. And besides, we always hoped maybe at some stage they might come back to us for something else (they didn’t).

    Would I call them up and waste their time in the way Neil supposedly did with his market trader? Nah, I’m not that childish. Judging by the responses to his original article – and some of the initial ones to mine, that consideration does not apply to many financial advisers.

  13. Is it me? Maybe I am just plain stupid but where do the people get their so called “clients” that want to know all the ins and outs of what they are doing? None of my clients are interested in the “costs per sae”. When all costs and commission are disclosed, the vast majority of my clients make 2 statements and ask one question. ist normal statement is “I no that values can go up and down…..” this is followed by the usual question “If I give you this investment is there a reasonable chance that after 8 or 10 years I will have more in this than if I left on deposit?” To which my answer is always yes there is a half decent chance but it is not certain. Their second statement is normally “I understand that…….” Maybe its just the way I sell the products but most “average clients” (I hate that phrase) are only looking to try to make a fw more quid than they can get in bank or building society and so the selling aspect is tailored to that. It is so much easier to agree realistic expectations from them and they dont expect to set the world alight with consistent double digit returns. (for those young IFA’s out there reading this, yes we did used to get 4 or 5 good consecutive years of growth of 10%+ pa. Hard as this might be to believe). Lets get back to selling good products, in simple terms and not get hung up on all the fine detail. Most clients do not want to know.

  14. Sorry Mr. Cicutti, but I can’t see any real point in your line of reasoning.

    Mr Liversidge’s argument is based on principle – what kind of information a consumer needs, wants and/or should be given right to have in order to make an informed purchase decision. I think it stands to reason that, in principle, disclosure of product features and price is the kind of information consumers need to make an informed purchase decision. Whereas on the other hand disclosure of profit margins and/or commissions is first of all without real bearing on the consumer’s economic outcome of the transaction. The age-old trade-off for the consumer goes ‘Price/Quality’ (or ‘Cost/Benefit’), not ‘Seller’s Profit/Customer’s Benefit’ or anything along that line. Furthermore on the line of a debate on principles, profit is the secret to the seller, putting the ‘free’ in a free economy.

    Traditional market liberalism may be currently out of fashion, but sticking to principle in the line of an informed debate is not the same as being reactionary.

    What I would agree on though, is that when markets vary in profit margins, ‘information assymmetry’ is one of the factors governing margin levels. Regulators may – and should – well do all their best of informing and educating consumers on product features, fitness with personal needs, and provide opportunities for price and product comparisons.

    If, and perhaps only if, regulators succeed in providing consumers with information that makes the market transparent in a real sense (info widely available, majority of consumers have a thorough-enough awareness and understanding), then the laws of the market will push the equilibrium price of supply/distribution down. Not to zero though, a fact that most sensible people would understand.

    Or maybe – and this may sound appalling to some – the fact is that the equilibrium price of financial advice is actually at a stable equilibrium, that more information in the market simply won’t reduce consumer prices to any substantial amounts?

  15. Interested Onlooker 15th November 2012 at 11:13 am

    The point that is being missed here is that Neil is not comparing like with like. The chain-smoking market trader is pefectly within his rights not disclose his profit margin, however it would be stupid if he declined to tell you how much you had to pay for his goods and you only became aware of the cost, to you, when you received your bank statement showing how much he had debited. Not sure many of us would accept that situation. The other point of disparity in Neil’s little “case study” is that if he was open and honest about his fee at the start of the meeting he perhaps wouldn’t waste his time passively smoking and undertaking ultimately fruitless work

  16. The RDR is a crock and most of us know it. It will have huge consumer detriment, most of us know that too. But it is going to happen and bitching about it changes nothing – we simply end up looking like King Canute and as I recall his feet did get wet.

    We may decide to speculate half an hour of our time at our expense in the interests of securing a prospective client but after that they are “on the clock” in some way. As advisers we sell reports, implementation and the words that come out of our mouths. So after 30 mins “here is our fee agreement, this is how much we need to be paid, please sign this before we go any further”. Document signed great, move on/ no signature – next please!

  17. Let’s face it, the sins of some advisers selling rubbish products for high commission incentives offered by providers has brought about the death of commission as a method consumers can use to pay for their iFAs services.

    Nic is right, we are in the 21st Century with a highly technically minded population, even market traders carry mobile phones and computer tablets now, so discussing how you are paid is irrelevant.

    You just need to get this agreement from the client before you do the work

    Simples!

  18. It’s really quite simple…these days we are paid to sort ….not to sell… and perhaps leaving it until the last moment is not the best time to mention what your fee may be..

  19. Excellent article – with some really valid points.
    Well said

  20. NC:”Let’s get real. The vast, overwhelming majority of consumers do not object to financial advisers earning something from the sale of a financial product. What they want to know, however, is a combination of two things: the cost to them of the advice they are receiving and what they will get for their money, both now and in the future.” And here’s the nub problem. Commission is NOT the cost of advice. It includes marketing and distribution costs. Post RDR there will still be expenses that were covered by pre-RDR commission. The cost of post RDR products will INCREASE, not decrease.

  21. Neil F Liversidge 15th November 2012 at 1:00 pm

    A lot of the above responses miss the points missed by Nic. i.e. 1) A lot of the FSA’s agenda is envy-driven by those who could not do what we do if their lives depended on it, i.e. start a business from scratch and run it at a profit. Ask the FSA. “How many of their staff have ever done that?” I have, several times. It’s a question they never answer. 2) The FSA, FSCS and FOS will charge you as much as they want to charge you, and there’s nothing you can do about it if you want to stay in business. At the same time they will try and reduce the income you have available to pay their charges. That is economic madness. Still, if you’re happy being squeezed in the middle and doing nothing about it, good luck to you. I choose not to just sit and take it, hence I campaign, on my own and within APFA. 3.) The FSA is leading clients to believe that only cost matters, not value. It interposes itself between adviser and client at every opportunity to create pointless mistrust and it does its best to build in sales prevention mechanisms in those areas of advice – protection – where sales are most needed. In that it does the entire population a disservice.

  22. ‘I’ve also always believed in disclosure and complete clarity and honesty before those I serve, however.’

    So come on then, Nic. What do you earn for churning out this drivel? I don’t mean salary – what’s the TER?

    I want to know before spending any more time on your self-regulated services!

    A handful of disagreeable comments to your article and you brandish the proverbial tar brush. You should be offering serious, intelligent debate and not what appears to be, a personal grievance against the IFA community from some nincompoop who was bullied at school.

  23. I`m with Hugh Jarse, lets non of us respond to any Nic Pics in future, he`s a waste of time.

  24. Nic – Who is going to write the frothing comments under your articles once all the dinosaurs on this forum are put out of business by the RDR?

    Will Money Marketing permit them to comment when they work as market traders?

  25. To Alan, Nic and Neil

    The fact is I wouldn’t want to live in your world is what you’re proposing is a very uncaring society that those that have the most contribute nothing towards those at the bottom. The state benefits system is a universal benefit and with the proposed changes coming up about in around 2020 with the flat entitlement of £140 per week we will see thousands if not millions of hard-working mothers and indeed stay at home fathers receive benefits in their own right for the first time. There are a number of reasons why people cannot work and although I agree with the tightening up of the benefit system which is overdue I do not think that having an uncaring society is good in the long term only end up in riots like we have seen in southern Europe recently.

    The fact is that what is needed is a little bit of nanny state and some of the things that the coalition are proposing I strongly agree with like the merging of national insurance and income tax. The fact is national insurance has never provided people with a pension or indeed health benefits this is just government propaganda. It merely goes into the general spending of the government and a radical rethink of how the system works is drastically needed to encourage employment.

    With regards to the compulsory pension system this is working well in other countries like Australia and New Zealand and many others so I don’t see what the real problem is with respects to in the introduction of the system.

    One last point I would like to make is in respects to emerging countries like China. They actually save more per head of population than the typical UK citizen, so when we say that we going to lose our competitorship to China maybe we should take that little fact into consideration.

  26. Alan Nic and Neil

    Sorry the above piece was posted from another article I was writing so I thought I would make my point again.

    I have never understood are obsession with commission disclosure or even the new RDR fee charging models, as if you provide a great service in my humble opinion there are no problem in disclosing and I honestly don’t have any problems with it. Instead of constantly going on about things that we cannot change maybe it’s come time for our industry to discuss some really serious subjects that do affect our industry on a daily basis.

    1: The rise of individuals working in our industry without proper authorisation and I include professionals like solicitors, accountants and even claims management firms in that comment. The reasons why FSA fees are going up through the roof is because the dwindling number of individuals left in the industry and the total in action on behalf of the regulator to clamp down on those companies operating in giving advice without authorisation. This is much more serious subject than commission disclosure for Christ sake and one that all advisers need to start waking up to as ultimately we are the ones are going to be blamed for these people actions. Consumers don’t differentiate between individuals that are authorised or unauthorised they just blame the person that is giving them the advice and tar ask of all of the same brush.

    2 Professionalism

    Instead of arguing all the time amongst ourselves maybe it’s come time that we should act together and use the FSA Handbook as our friend and not our enemy. I know people find rules like the total cost of protection policy to be disclosed in the suitability letter or illustration as ridiculous but it is there to protect you the IFA and not the consumer. We have seen so many miss-selling scandals and there’s always going to be an unscrupulous solicitor that is just waiting around the corner to sue you for miss selling, so wake up and realise that you have to act as a professional and put up with stupid rules like this. I know it seems like business prevention but unless you want to be bankrupt from solicitor claims you’ll take note of the regulations and just do it. There are much more important things to discuss as I’ve pointed out above.

  27. @Peter Herd – actually, with the exception of direct funding to meet real-time costs for the NHS, NICs are paid into the NIF. The NIF pays pensions etc. and the Government has to take out interest bearing loans if they wish to utilise these funds, which currently stand at a significant surplus.

  28. Neil F Liversidge 15th November 2012 at 3:47 pm

    @ Peter Herd: Have you replied to a different thread in this one by mistake?

  29. In reading the majority of these comments (thank heavens for the dissenters – at least I’m not alone!) it becomes apparent why we have had the RDR and why many in financial services are held in such low esteem.

    It seems that far too many of you just ‘don’t get it’ and that Nic’s accusation of you living in the 1970’s doesn’t seem too far-fetched.

    Why do advisers still insist on dragging themselves round on home visits like some double glazing salesman? This hardly chimes with the continuing mantra of professionalism. When was the last time your solicitor or accountant made a home visit? To me this smacks of desperation to ‘make a sale’ and is hardly appropriate for a member of the Association of PROFFESIONAL Financial Advisers.

    Then of course there is the matter of choosing your clients more carefully. I am sure I have previously mentioned my view that there is an important word missing from the adviser lexicon – NO.

    I can’t be accused of being London centric as I lived and worked in Manchester for 30 years. I even had clients in Yorkshire! (And still do) But in truth they are on a different planet from the one’s that Neil seems to deal with.

    Unlike many current advisers I haven’t always been a parasite. I was in manufacturing for many years. We produced a range of products – some unique and covered by patents. Sure we had to offer a competitive price within our field, but the customer knew what they were getting. They could pick it up hold it and use it.

    With a financial product – whether just advice or a life product or investment you are pedalling ideas. The customer can’t drive it out of your office, wear it on Saturday night or use it in the home. It is up to us to show the value as it is not obvious in the way a physical product is. It also helps if you engage with clients who have a brain.

    As to Neil’s repeated mention of the envy of others – well it serves you right for having clients not in an equivalent (or better) income bracket to yourself. I have never come across envy – even when I lived and worked in the North and clients saw the Maserati parked outside my office. (Couldn’t run to a Ferrari).

  30. Interesting that when I’ve questioned your remuneration you slag off my advice to my clients. Dickhead!

  31. What we have here is a heated debate!! Fantastic.

    I agree with Neil entirely and oddly enough see that Nic does make some agreeable points also.

    The odd thing as I discussed a ‘project fee’ with a company director of £500 for him and his Co-Director was that he told me he had just charged someone £3,000 labour costs due to the work involved. But my overt and transparent investigations costs are verily expensive!

    Transparency and honesty allied with matching actions are not the issue its simply that often consumers may not wish you to earn anything for your hard work.

    We must improve how we communicate – I recommend readers join their local IFP who are grasping this stinging nettle.

  32. As very often, Nic is right.

    Enormous detriment has been caused to clients by massive charges and commissions for very little work.

    The FSA has had it’s hand forced through the sheer greed of the whole Financial Services sector (including IFAs) and now we have RDR.

    The client needs to know exactly what they are paying and what for. It’s about offering a fair deal not just ripping people off because we can!

  33. With the sole exception of Harry Katz (who, perhaps with a touch of comic irony, seems unable to spell the word professional correctly), the point that everybody here is missing is that Neil made the fundamental mistake of agreeing to see the client at a patently unreasonable hour. By so doing, he relinquished all control over the proceedings. And if the client chain-smoking cigarettes was unacceptable he should have asked him to desist or terminated the meeting.

    Yes, I am prepared to do home visits (which no solicitor or accountant would) and I accept that many people cannot easily take time out during business hours (the only time during which a solicitor or accountant would be prepared to consider an appointment), but I refuse to consider appointments commencing any later than 6 p.m. or at weekends. If people wish to avail themselves of my services, they must accept that the timing of any appointments shall be on my terms, not theirs. Except to deal with outright emergencies, even plumbers or electricians won’t come to your home outside normal workings hours and, if they do have to come out at an unsociable hour, they’ll hike their normal rates accordingly. Why should we be any different?

    Neil should also have demanded an upfront fee for his pre-sale work, if only as a gesture of serious intent. If the client’s needs were just for protection, the fee need only have been nominal but if you don’t charge a pre-sale fee, you’re work is purely speculative, with no commitment from the client, and predicated solely on selling them something so you’ll get paid commission. That’s not a professional business model.

    Again, to draw a parallel with solicitors and accountants, the first meeting is free (and is usually limited to no more than 40 minutes or so, which is a lot less time than it takes a financial adviser to compile and discuss a FactFind) but anything you might wish them to do for you thereafter is subject to a signed agreement to pay them for their work. How can we expect to be perceived as professionals if we don’t operate along similar lines?

    If prospective clients refuse to pay a fee on the grounds that they perceive a proper assessment of, as in this case, their protection needs, plus costings and setting down your recommendations in writing, amounts to nothing more than “getting together a few quotes”, they’ve obviously failed to understand what you do, the time involved in doing it and its value. People like that have no respect for you. Your best course of action is to walk away from them without looking back and concentrate on clients who are prepared to pay for your services.

    The sequence of events that Neil recounts occurred many years ago and I imagine that nowadays his approach is similar to mine. Those who believe that, going forward, they can continue to operate on what I for one consider to be an outdated, speculative, primarily sales orientated business model are going to find life increasingly difficult. I very much hope that the banks will have the greatest difficulty clinging to such a business model. Times they are a-changing and we have to adapt accordingly.

  34. Julian

    Irony – correct – my little swipe at what I consider to be a facile title. (Are there unprofessional advisers?) Perhaps I tend to be too subtle on occasion – apologies.

  35. I am actually surprised that any of you actually have time to see these clients you all profess to offer a wonderful service too. It appears to me that you spend half of your working day commenting on the various articles in Money Marketing. If it’s not the mutual back slapping of the clique its the sniping at the banks, life companies, networks ad infinitum.

  36. @ Guy Burham

    Your sense of irony is priceless, gold medal standard, in fact…

  37. Now a days it’s easier to buy 2nd hand things from buy/sell websites of 2nd hand things. Try http://bechdaal.com. it works with 100% delivery guarantee.

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