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 firstname.lastname@example.org