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Reid all about it

As a teenager, I worked for a tailor in Glasgow and we had short supplies of anything in chest size 34. When asked by a customer what we had, I responded with “Not much” and the person duly exited. The owner took me to one side and suggested that I took an alternative approach. When next asked for size 34, I responded: “Let me show you our special selection.”

In these political times, this was what is now known as message management and I am sure a similar approach will be used in the major banks to explain about multi ties.

When selecting companies’ products, the early attack on polarisation by the Office for Fair Trading was assisted by the love of panels of networks and national IFAs. This enabled the OFT to describe this as less than whole of market. The local or non-national IFA can look market-wide and I reject the assertions made by some bankers that IFAs do not research the whole market. The banks sell products. They can kid on about being wealth managers but that is nothing more than a guise to flog more products. When you con- sider the profits from credit cards and personal loans, any move to increase profits in personal financial products needs to be a volume play. The private bank approach can only deliver similar profit margins if it defaults to a buy list.

The independent will, as a friend of mine said last week, “wipe the floor with them” but only if we too avoid “flogging product”. We need to focus on the added value our relationship can deliver. We must ensure that we keep up with the offerings of the major banks and produce equally compelling options. The public do not have anything like the connection with the “man in the cupboard” that was true in the past. They see the banks as inflexible and expensive.

We must lever on this impression or face the onslaught of TV ads pushing this “selection” of the best. Perhaps one alternative would have been to insist that all advisers are independent and cannot be owned by “manufacturers”.

The undercapitalisation in the IFA world prevents this becoming an early reality and just as the public are being urged to invest, we as business owners need to do the same.

Our message must be about life management and not just focus on the performance of a particular fund or product. What worried me most about depolarisation was status disclosure. This was where the battle would be bloodiest. CP121 had its problems but fee-based was the most effective disclosure we could have had and it may be that we will request its return.

One time in the tailors, a customer complained that the trousers were shorter on one side after an alteration. The tailor took the customer by the shoulder and dropped the shoulder on the short side till the legs were level.He then told the client that he had been walking lopsidedly and we were delighted to have been able to sort out matters.

The current concept of offering a “special selection” and with that selection being equivalent better than whole market is simply not borne out in reality. Skewing someone’s perspective to facilitate that impression is not acceptable.

Robert Reid is director of Syndaxi Financial Planning

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