View more on these topics

Setting sales

Does the regulator believe that financial services and products are bought or that they are sold?

Not a new question, of course, but has it ever been asked of the regulator? I am talking about the FSA here, not the Financial Ombudsman Service.

I am no psychologist but over the years I have analysed the purchases and sales that I have been involved with and it seems to me that consumers fall into three distinct groups. There are those that recognise a need and take the necessary steps to resolve it.

Those that retain an awareness of some lack of provision but do not take those formative steps and then there are those who have little inkling or interest in investigating such mundane matters. Within each category exists one or more sub-genres based on matters as intelligence, confidence and affordability.

For some years, my company’s business has been dominated by mortgage arrangements and, in this instance, a clear awareness of a want – ownership of a new property – has galvanised consumers into taking those necessary steps, that is, searching out a suitable mortgage.

Once the property has been purchased, the awareness of the need to regularly review the mortgage arrangement takes a back seat to other matters as it is no longer such an enticing prospect.

In other words, clients buying a property approach me without any prodding or persuasion but when their fixed or discounted period ends they often need a push to review matters, even though it is to their advantage.

With other financial areas, such as protection, the situation is similar. The psychological urge to search out a solution to satisfy a need rarely applies with personal and family protection.

Most consumers have some perception that they are underinsured or uninsured and often entertain vague ambitions to look into the matter.

Notwithstanding the public’s general ignorance concerning the range of products available there is also a deep-seated refusal to take those measures necessary to solve these problems such as approaching an adviser or financial services company.

This is nothing new and, more topically, is not a model which has become broken or been warped over the past 20 years. This is reality. A reality which most professional committee members fail to recognise, perhaps because they do not live in the real world where surplus funds are limited and the capacity to recognise and respond to a potential problem has been supplanted by the latest excitement on Eastenders or Arsenal’s recent Champions League performance.

An analysis of my company’s protection sales reveals that the majority of protection plans are bought when dealing with mortgage arrangements.

Of those which are not mortgage-connected, the majority have arisen because I broached the subject rather than by the client approaching me. In other words, I sold the concept and the product.

Now if I am right, then it means that the wholesale regulatory tinkerings of the last 20 years, culminating in last year’s RDR proposals, are actually to blame for the public’s failure to save and insure.

The most obvious victim of the various regulators has been the salesperson, with estimates showing an 85 per cent reduction over the past 20 years.

The word salesman is invested with a negative vibe and sneered at by many, including some holier than thou advisers who prefer the lustre of the adviser title.

Yet that is what we do, we sell the concept, we explain the problems, provide the insight and sell the solutions. In this regard, financial salespeople are of greater worth to the community than fee-based advisers who await the call of their next high-networth client.

So, does the regulator believe that financial solutions, that is, products, are bought or sold? If they accept that the solution to the current retirement and protection gaps is the take-up of greater numbers of dedicated products then the question is somewhat rhetorical.

Whatever comes out of the RDR consultation must take into account that greater numbers of products need to be shifted.

It must accept that selling solutions rather than waiting for consumers to purchase them, is the answer. It must also accept that enabling lesserqualified advisers to sell high-charging products to unsuspecting consumers under the primary advice banner is not treating customers fairly.

Alan Lakey is a partner at Hichclere Financial Services


First loyalty should be to your customers

I feel compelled to respond to the open letter to mortgage intermediaries printed in Money Marketing last week. Had it been two days earlier, I might have dismissed it as an April fool. It is difficult to argue against the actual words of the letter but the sentiment is very much misfounded. I would say […]

Em chief denies it is the end for packagers

Em financial managing dir-ector Roger Morris has dismissed warnings that the closure of Lehman Brothers’ two UK subsidiaries, SPML and Preferred, could signal the final blow for the majority of packagers.The Mortgage Practit-ioner sole trader Danny Lovey believes last week’s news will be the last straw for many packagers.He says: “I think we will see […]

Sense of gilt

In recent weeks, the gilt market has been mov-ing to a global rhythm rather than a specifically UK one. The UK has its own market idiosyncrasies which are apparent in the shape of the UK gilt yield curve compared with the US and European curves but the dominant global theme remains the credit crisis and the liquidity crunch accompanying it.


Out from the long grass? An IT and NI merger

Those with a long memory will recall that at the start of the last parliamentary term George Osborne announced his intention to merge income tax (IT) and national insurance (NI).  Headline grabbing as the initiative was, the reality of the complexities, challenges and costs of such a move resulted in this idea being kicked into the political long grass.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm