It was to be expected, really. No sooner had I dared to claim that some financial advisers are incapable of stringing two words together without nicking at least one of them from a fund manager’s presentation – and then spelling it wrong – that I got lots of emails from IFAs telling me I was making things up.
If only it were true. The reality is that I have some experience of just how bad some IFAs really are, not only in terms of how they write but also of the quality of their advice.
You see, for most of the time I was directly employed as a personal finance journalist at one of several newspapers, one of my regular tasks was to curate a financial advice slot for our readers. This was where a reader would write in with a financial problem and I would then contact several financial advisers in an attempt to solve it.
A popular alternative was the “financial makeover”, where the reader would give details of their finances to the IFA, who would then put together a plan dealing with those issues.
Over the years, I received hundreds of contributions from advisers – many of whose raw copy I have kept on file – which were then edited and published by each respective newspaper. There were some extremely well argued, grammatically correct and well thought out pieces but others were indifferent and a few were incoherent.
The advice was shoddy too. Let me give you one example among many – a colleague of mine on a newspaper, not a journalist, I must stress, once put herself forward as a case study.
Most of her key financial issues were unexceptional – protection, a better mortgage, a more structured investment strategy for her savings and so on. The IFA more or less touched all the required bases.
Lurking amid all her other issues was one glaring problem. Ten years earlier, back in the early 1990s, she had been persuaded by a life company salesperson not to join her company pension scheme, into which the employer paid 4 per cent of income, and set up a personal pension instead.
It never occurred to her that any misselling had taken place and if it had been left to her adviser, that is how things would have remained. He failed completely to pick up on this. It was not until I pointed out to him that there were serious problems with regard to her pension that he amended his report and recommended that she ask the life company concerned for a pension review.
In the end, she received £23,000 in compensation, no thanks to the IFA who was more concerned with recommending a series of financial products than assessing her needs.
Thankfully, not all IFAs are like that. Some not only deliver half-decent financial advice, they even know how to string words together too.
Money Marketing fellow columnist Alan Lakey, for example, last week demonstrated not only his passion for self-improvement by using “melodious” to describe my views.
He then demonstrated his talents as a writer by elegantly repeating my very point from the week before, that IFAs contribute an infinitesimal fraction of the cases considered each year by the Financial Ombudsman Service.
Except that in my case I was trying to inject a sense of reality into the debate, so that rather than use the FOS as an inappropriate target for IFAs’ anger, one or two more far-sighted advisers might even start to celebrate the fact that, by and large, the vast majority of them rarely face a com-plaint from consumers about what they do.
Alan, on the other hand, seems unsure of what point he is trying to make, other than to allege – without providing proof – that FOS staff “are poorly trained, exhibit minimal knowledge, have scant industry experience and, frankly, some of the time, do not know what they are doing.”
I assume that he can back that up with evidence, perhaps with, say, 20 examples in the past year where FOS “adjudications have been ludicrous, with thought processes and logic reminiscent of primary schoolchildren”.
It would also be good to know precisely what proportion those examples might be of the total number of cases affecting IFAs. Clearly, the figure cannot be more than four out of 10, as Alan himself points out that 61 per cent of cases are found in favour of IFAs.
Moreover, as he well knows, the adjudication stage is only the final part of a process, beginning with enquiries that rarely ever turn into full-blown complaints, usually because “poorly trained” staff with “minimal knowledge” and “scant industry experience” manage to stop a complaint being made in the first place.
As we are in the midst of the party conference season, it is worth resurrecting Tony Blair’s comment in the 1990s that New Labour’s “project” would never be completed until the party grew to love Peter Mandelson.
He was wrong about that on many, many levels. However, to paraphrase Blair, when it comes to IFAs, I fear they will never be regarded as professionals until they learn to stop talking about the FOS as if it were the devil incarnate. On current evidence, we have a long wait ahead of us.
Nic Cicutti can be contacted at firstname.lastname@example.org