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Philippa Gee: Are financial advisers that gullible?

Phillippa Gee
Phillippa Gee

Picture the scene: it’s the strategy day for an investment provider and they are busily coming up with new products to flog.

They propose an investment offering high levels of income – and a risk to match – but camouflaged with some pretty fantastic marketing material. Their concern is how to attract investors? How on earth can they convince the end investor that this high voltage product is actually “safe as houses”?

Ah, but that’s the point: they don’t need to convince the investor – they simply need someone else to spin the lies for them so they can hold their hands up as the innocent party when it all goes wrong. How do they convince someone to do that for them? Is it to come up with a product that actually delivers, that won’t become illiquid and that will provide the level of risk stated by the marketing material? No, don’t be ridiculous. They just offer advisers a commission of 10% and their work is done.

Well, that is how it appears to me. I see a good proportion of new clients coming to me to help them unravel various investments their previous advisers have set up. This is often a challenging task as not only do you have the financial effects to consider, you also have the emotional impact on the client. For many, they have trusted someone with their financial livelihood and have had that trust completely destroyed, along with their means of retiring, as the products have lost considerable value and in various cases are now completely illiquid.

I find this sickening. That an adviser can hold the trust given them by the client in such contempt (that they feel no responsibility for their actions) is despicable and how can the investment provider, coming up with this sort of nonsense, sleep at night? It’s just wrong.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Everything is as you say Philippa, but that is how the financial world is. Commission rules the sale person’s life. When you conside that recent figures were stating 27% trail commission is it any wonder ?

  2. We have been fully fee based for 18 months now and get 80% of our fees from the client-not from the provider (which is no more than commission really). We have never recommended structured products, UCITS or anything else that depends on complex financial instruments or wildly radical investment vehicles. With £50M under management our clients seem happy with what they get.

    Commission needs to go ASAP-believe me, clients DO pay for advice!

  3. Get rid of commission, get rid of the problem. Your article, whilst true, is a little late in the day. The FSA asked themselves the same question years ago and came up with the correct answer starting 1st Jan 2012.

  4. Well said Phillippa.
    The nasty and dishonest are ever with us, whether they work as product floggers, advisers or M.P’s or Bankers or Footballers or ………
    Keep the flag flying!

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