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Nic Cicutti: IFAs must learn to accept criticism

About 13 or 14 years ago, before the internet took off in a big way and certainly before the growth in popularity of posting comments at the bottom of online articles, people would respond to my column by sending occasional emails or writing letters.

Every week or two, a packet of letters addressed to me would be sent to my home address, leaving me with the enviable task of reading through them and responding where necessary.

There were times when I did not know whether to laugh or cry. For example, when an RI at a big IFA firm wrote a letter that culminated in him urging me to take part in a range of athletic sexual exploits involving myself alone.

The same chap added that he was withholding his name to protect him against my passing his details to his employer – a strategy somewhat undermined by the fact that his letter was on headed notepaper.

I was reminded of that RI the other day, when reading some of the online comments apropos my Money Marketing column on Arch cru, including the one whose author had cancelled his subscription to the paper in protest at what I had written – not in respect of that article, however, but one published the week before that. Think about it.

The irony is that I thought I was being conciliatory – criticising the FSA of failing in its regulatory duty concerning Arch cru and calling for the reform of the FSCS, with the only contentious aspect being that of supporting the need for IFAs to review their recommendations of Arch cru products to clients.

This last point rankled, not least with those who did recommend Arch cru to clients on the grounds they were low- risk products or despite not understanding what they were invested in – and then blaming the regulator because it “failed” to tell them there was something fishy about Arch cru’s risk-profiling.

If I had written a column lambasting banks for wide-spread misselling of payment protection insurance products and defending the regulator’s call for automatic reviews of these awful products, there would not have been any outcry from advisers. It seems crackdowns on misselling are all very well, as long as IFAs never have to face the teensiest scrutiny about what they do with their clients’ money.
That being the case, never let it be said I am unwilling to provide some additional guidance on how to build your business.

Forget basic incompetence, why not go in for a bit of pointless churning? This fantastic idea was encountered by Philippa Gee, a highly respected financial planner. She wrote in Money Marketing recently that an IFA she had met recently “who represented a large group, maintained their view was to carry out regular quarterly fund switching as the golden ticket for ongoing fees.

“Now don’t think I mean rebalancing by this, I mean that they are fully intending to switch their clients’ entire investment sum out of funds which may be performing more than satisfactorily and then reinvest in alternative funds, just for the sake of it. This is not being planned with a defined investment process in mind but instead the sole goal was to secure the ongoing fees and demonstrate ’value’.”

For those of you who are still readers of Money Marketing, despite my highly offensive remarks every week, there is a tip worth taking up. Sadly, the tiny minority who have given up the paper will not be able to benefit from such tactics, unless they engage in them already, which clearly is not the case.

The reality is that despite the protestations, there are still far too many cases where advice is highly negligent and research into product choices consists of regurgitating whatever rubbish is printed in marketing brochures.

And for others – Philippa Gee’s “IFA who represented a large group” – the concept of “service” involves completely futile and potentially costly switching from one product to another. Is that really how that “large group” intends to earn its trail in future?

It is this kind of pathetic and ineffectual pretence of activity that disgraces IFAs. Yet Philippa’s disclosure seemed to elicit no serious criticism of such activities from readers.

No wonder F&C predicts there will be a significant increase in self-directed sales. I would never go down the multi-manager route but for a minority of IFA clients who have had the bitter experience of putting money into a “low-risk” product that lost 40 per cent of its value, the idea of making your own mistakes rather than relying on someone else’s incompetence sounds vaguely comforting.

Going back to the idea of an IFA boycott of my comments, I have been there before. In fact, a favourite story from my snailmail days concerns the angry adviser who wrote to me saying he would never read my column again.

Taking a leaf out of former Sun editor Kelvin MacKenzie’s book, I phoned up the IFA concerned and told him that far from him boycotting my column, he was now barred from reading it. “You can’t do that,” he spluttered, “I’ll read what I damn well like.”

Nic Cicutti can be contacted via



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There are 26 comments at the moment, we would love to hear your opinion too.

  1. man on the moon 25th May 2012 at 1:38 pm

    Lovely sunny day, can’t be bothered to be upset by critcism. If i wanted to do that I would just read the comments on the Guardian finance articles or listen to the FSA etc.

    We are damned more than most, actuaries now theres an interesting lot. I have come across some ‘interesting’ practices from that highly qualified group – not all or even lots but some.

    Now don’t start me on Lawyers and what about them journalists…..wanna be Mark Twains and Wilbur Smiths

  2. Switching commission should be banned ! Trail (or ongoing fees) should cover reviews which might or might not ultimately result in switching decisions. Any adviser who then adds another ‘fee’ for a basic admin task which represents the action necessary following the review should be ashamed of him/herself.

    That said, there will always be good and bad apples and no amount of regulation will rid financial services of the bad apples – indeed, the ‘box ticking’ mentality of the FSA can make it easier for bad apples to be compliant.

  3. Hossein Ameli 25th May 2012 at 2:21 pm

    Thanks Nic for all your valuable and consistent input over decades. A lot of IFAs like me appreciate your critical approach and learn from it to improve. Please carry on. Best regards, Hossein

  4. Nic, in all seriousness, we have issues such as the impending collapse of the Eurozone etc.etc and you produce this journalistic offering. We have suspected for some time that you were running out of material, but this is dire.

  5. Incompetent Journalists Award Team 25th May 2012 at 2:25 pm

    Journalists also learn to accept criticism!

  6. Suhan Srinivasan 25th May 2012 at 2:29 pm

    I guess most people don’t like to be criticised. Most IFAs agree that there are some bad advisers out there… maybe more than a few. What would annoy people most, would to be unfairly criticised.

    I do think that those IFAs that recommended Arch Cru feel unfairly blamed. I do think that it must be partly their fault, as they are the professionals and were paid for their advice. However, there must be a limit to how much they were expected to predict. I do feel sorry for them. Some IFAs probably did no due diligence and I have no sympathy for them but do you believe that none of the IFAs did? It is unfair to lump them all together.

    It is easy to criticise with hindsight. Maybe you could look at the information that was available at the time for Arch Cru and work out what was reasonable to conclude.

    Nic, it might help it you try and provide a more balanced view. While your view may have its merits, it may be beneficial to look at the story from different perspectives. I realise that this may involve more work for you but even you must agree that it would be better journalism. Maybe it is not criticism that they have a problem with; maybe it is your version of the truth.

  7. Those who recommended Ardh Cru are negligent and should be brought to task but don’t worry those of us that didn’t will happily contribute. Nic I don’t often agree with lot of your comments but the advisers in question need to accept responsibilty just don’t put us all in the same bracket.

  8. Patrick Schan 25th May 2012 at 2:33 pm

    The most amazing thing about Philippa G’s piece was that it had never struck her before that any fee based IFA’s might contemplate such a thing.

    But don’t worry Mr Ciccuti, this will all stop soon as your precious RDR comes in as it will solve everything and the percentage of complaints agfainst IFAs will drop from 1% to zero in no time.
    As many of us have said for years, it is all a waste of time and money and I look forward to reading your apologies from the likes of you in due course. But I won’t hold my breath.

  9. Nic

    Do you mean accept criticism like Insurance companies, mortgage companies, investment firms, bankers, lawyers, fund rating companies oh and FSA, FOS and FSCS all do?

    NONE of us are perfect, but do you not think that we are in a position like no other profession?

    I left a zero off of one of the figures in my Gabriel report last year. First mistake ever, but was told that if it happened again, supervision of my firm would be increased dramatically! My fault!

    I turned up to an FSA workshop 3 months later to find that the start time had been advertised incorrectly, but that was just a computer error! And what about key documents being published by FSA with incorrect figures earlier this week?

    Rant over, but please write about something that is really important, like the errosion of independet advice for the middle classes through RDR.

  10. A better headline from Cicutti would be ‘IFAs should learn to never bother reading the crap that I write’

  11. A very revealing article. It would have been better for you to speak with your Therapist before composing the above in my honest opinion. Did I just hear another stone crashing through your glass house???

  12. Justifiable criticism we accept. Inflated opinions from non-participating individuals we do not

  13. keith@sinergi 25th May 2012 at 2:59 pm

    Coming from an asset management background it is important to have an independent source of evidence for any decision. In the end you can be wrong but the crime is not having a reasonably sound method or process for managing change decisions.

    This will be the great hurdle after RDR fades in to memory. If you can not show a robust approach to investment decisions whether they are outsourced or not you leave yourself open to accusation.

  14. Usual wind up merchant!

    He’s been asleep all week then pops out the wardrobe to try and rattle us on a Friday afternoon.

    Why dont we all just ignore this waster.

  15. Big big LOL. Nic Keep writing – I beg of you. I now read the comments on your blog before reading any of the article. Often the replies actually saves me from reading the drivill you put out as I can guess what you have said from the comments. Ladies, Gents keep going!! Friday always make me smile by reading the comments. Have a good weekend everybody

  16. Nic, who is your column aimed at. Every week you rubbish IFAs & accuse them of miss-doings and this week in a ‘hurt’ manner say “If I had written a column lambasting banks for wide-spread misselling of payment protection insurance products and defending the regulator’s call for automatic reviews of these awful products, there would not have been any outcry from advisers.” but Nic IFAs give small numbers of complaints with around 1/2 upheld. That’s not to say we should be happy with that and strive to improve which we are. You have rarely if ever defended the IFA and if you cannot see the travesty and unfairness of RDR, your journalistic skills are sadly lacking and not only doing a disservice to IFAs but the ordinary person who needs financial guidance. Come off your lofty position, speak journalistically to IFAs and their clients, see their concernes and then write a proper, well researched, balanced and well informed column instead of the rabble rousing clap trap you currently do. I can only assume you laugh with your cohorts at the reactions you get from honest IFAs, worried about their livelihood and their long term clients well being because you have done nothing to improve anyone’s situation and have wasted your platform. You should be ashamed and embarrassed of your efforts so far.

  17. Peter Taylor… bet you have never done an Interest Only mortgage, walked on the crack of the pavement, watched p@rn, gone out without suncream, eaten butter, undone your top button of the shirt in the office, boy, I want to be just as rightous as you. You’ve been lucky so far my friend, but beware, before you get a sore ar#e from sitting on that saddle on your high horse, the next stage coach crash carrying a failed investment may just land outside your door.

  18. Ha ha, another brilliant wind up Nic.
    Ever thought of going into serious journalism mate ?

  19. Now and then I have a browse through clients’ suspension files (before we became a paperless office). I enjoy looking at the financial advice given by experts writing in old editions of Money Marketing. I was looking at one yesterday from August 2000. This article was written by an IFA who is noted for criticisms of the financial advice of other IFAs regarding Arch Cru and Keydata. Here’s this IFA’s advice: Customer had a pension fund of £300,000 and was going to retire in 10 years, what should he do? Answer: 10% in commercial property and 90% in equities. Not unit trust equities. Direct equities in a SIPP. The customer needed to see a stockbroker! Well well! I thought I’d check out the subsequent Footsie levels to get an idea of the investment growth the customer could expect from this expert advice. 12 months later Footsie down 19.90%. Next 12 months, down a further 20.91%! Attitude to investment risk not mentioned once. Not once.

  20. All jorno’s are phone hacking scum bags who lie and slander at every given oppertunity.

    Its not nice to be tared with the same brush as the wrong do’ers in your profession is it !!!


  21. @ Paul Wooley: about as often as you think about becoming a genuine IFA.

    @ Marty: read it in any order you choose

    @ Anonymous who wants to “ignore this waster”: you’ve just proved my point for me. Thanks.

  22. Nic, I’ve been in this business a long time and it seems there’s a lack of interest from anybody about the total demise of an industry which in its heyday employed many thousands. Banks can sack, get rid of, make redundant, close branches and put thousands of people out of work, and it barely warrants a mention. Yet our Government shouts from the rooftop when Nissan promised to build a new car on Wearside which might create 500 – 1000 new jobs which hardly accounts for anything in the scale of things but of course this is manufacturing, real work. When I read some of your articles I despair, some of the examples you hold up as indicative of how some IFA’s will overcome RDR by ie. churning, yes it’s still called churning, are either you living in fantasy land or the person you’ve quoted is gilding the lily?. As a network member I benefit from a research department who compile a recommended product list. Usually, but not always it covers most scenarios in my day to day activities, and churning within this network would be spotted in most cases within any 6 month period. Especially, if existing customers are being routinely churned. I obviously don’t know if the quote you use from Philippa Gee was accurate or not but please don’t hold this one example as some sort of indicator about how the rest of us will behave. You’re obviously aware your articles are designed to aggravate the IFA community and to that end you succeed but as a journalist you don’t seem very capable of offering anything interesting or new. Keep trotting out your same old rubbish and when inclined I might read something from you but usually it’s not worth the effort.

  23. ‘IFA;s run for cover as all is revealed’
    This is the type of headline we should be having from Nic.
    Why not compile a list of the misdemeanors perpetrated by the IFA community where they blame everybody but themselves!!!
    1.list of all the products that have gone wrong-check them out first and don’t fall back on computer produced advice(because you are unable to do it yourself)
    2.There is a river Churn-this is very near a town that was the HQ of a company accused on many occasions of ‘churning’ by many IFAs and self opinionated journalists.
    You can make a lot of money by advising a client to switch their investment as part of your professional servicing!!
    ‘Pot calling the kettle black’
    3.soft ware programmes that enable you to quantify your advice to ‘switch’ and of course earns more form it!!
    There are`many more I could add,but why waste my time?
    From many comments from the IFA community who find it ‘offensive’ to accuse them of being self righteous,over qualified bigots,I offer you the chance to put things right.
    Face up to your responsibilities and don’t hide behind regulation that you then criticize.

  24. As in all walks of life, we are continually faced by great opportunities, brilliantly disguised as insoluble problems

    When we choose to enter this profession / job, whichever you care to call it, we take on the responsibility of advising clients on what best to do with their money. Sometimes we get it wrong, more often than not we get it right, but in general I know of very few people who have died as a consequence of bad advice or unsuitable investments.

    So let’s put things into perspective, we as IFAs purport to give suitable advice and that carries its own draconian responsibilities, but I only have to look back into my old Fimbra rule book and remind myself again and again, of the need to gather sufficient information from the client as to ensure I am clear as to their financial planning needs and then to ensure I fully understand the risks and vaguries of any protection or investment products I recommend to them and ensure they understand these as well.

    The rewards of due diligence, careful planning, proper fact finding, correct risk assessment and appropriate product research which adds to our own understanding of the increasingly complex world of investment is the only way to sustain our businesses.

    IF we can demonstrate that to clients, you have them for life (except of course for rate tarts and those who can’t sit still and think the grass is greener on the other side of the adviser fence.)

    This job is all about client (customer) satisfaction, we are essentially a face to face client/customer facing business, intimately involved in clients lives and finances, ignore these fundamental requirements at your peril.

    After 22 yrs as an IFA and at age 63, I am looking not to retire at any time, but to maintain that friendly trusting relationship with my clients, many of whom are now firm friends.

    Post RDR many IFAs will have to look very carefully at what they do, how they do it and how the “added value” they bring to the clients table can be quantified.

    That is our challenge, not RDR, not exams, not adviser charging fee structures.

  25. Technically, criticism can be both positive and negative feedback, so in that respect criticism should always be welcomed with open arms. Might need a dictionary…

  26. Has no-one yet spotted the Irony with this (in terms of the comments posed at the bottom!)

    Made me chuckle to myself

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