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The malady lingers on

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 nic@inspiredmoney.co.uk

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Comments

There are 20 comments at the moment, we would love to hear your opinion too.

  1. And then spelling it wrong…!
    curate ? egg ?
    “..she received £23,000 in compensation,”
    Blimey didn’t know personal finance journalists earned that much !
    Nic perhaps you should read what you type? Especially when you attack others for not being able to spell.

  2. “I have some experience of just how bad some IFAs really are, not only in terms of how they write ….”

    “…she received £23,000 in compensation..”

    Priceless.

  3. “..one of my regular tasks was to curate a financial advice slot for our readers.”
    From the Latin curatus (compare Curator), a curate is a person who is invested with the care, or cure (cura), of souls of a parish. …
    Come on Nic.

  4. Nic, when you get yourself authorised and start paying FOS payments then you will be able to talk with more authority, although I suspect your views would change somewhat then!

  5. Nic, are you on holiday tomorrow as today is only Thursday. It is usually a Friday you publish rants like this

  6. @ John Whipple: picking on my arguments is fair enough, but picking on my English is tiresome. If you check your dictionary again you will see that it describes curating as “to organise/to oversee”. For example, Billy Bragg “curated” a certain stage and its music at Glastonbury, or Brian Eno curated Brighton Music Festival. Try harder.

  7. @ David Todd: I generally file a week ahead, but the actual publication date of my column is in the hands of the website editor, to whom I suggest you address your comment.As it happens, I am away tomorrow, thanks for asking…

  8. Sorry to upset you Nic
    Can’t find your definition anywhere not US dictionary or UK which edition are you using ?
    I only picked on you because you were picking on others. You did amend the compensation amount without comment however.

  9. Talking about the FOS, journalists etc, what did you do with the Consumers Association samples of Which? magazine that I sent you when asked publicly for some Nic? You remember, the topic was did Which? have mortgage endowment ‘best buys’. There are lots of such articles relating to guaranteed income/growth bonds, pensions, you name it. I can’t publish because Which? set their legal dog, or dogs, on me. I also have articles from national papers describing the benefits of investments which bombed eventually.

    What I am trying to say is that it doesn’t matter if an adviser had an ‘honestly held opinion’ (so did the regulators at the time) that this or that product or investment was suitable for Mr & Mrs Public the FOS can, and more than often does, make it all up after the event and the adviser can’t defend him/her self. For those of you standing outside this compensation machine which has become a prison it is a fact that you can’t see the wood for the trees.

    Having said all that I do agree with you that there are more useless advisers than you can shake John Tiney’s big stick at. But there are also some highly opinionated journos with selective memory syndrome.

  10. Pete Wildebeast 7th October 2010 at 2:55 pm

    The FOS do make some ludicrous decisions it has to be said!

  11. Steve Buttercase 7th October 2010 at 3:25 pm

    Fair comments Nick. It has changed now of course, but for years the world of Financial Advice was full of people pursuing a second career, many following the last great recession in the 90s, and it was, predominantly, a sales career first and a profession second. Often there were technically talented individuals who could not perform the sales function well but could absorb knowledge and calculate – many of those people ended up in compliance departments or paraplanning functions. In quite a few cases they would have had a poor experience at the hands of sales managers, or just the pain of starting a practice at that time and I actually believe this is the source of much of the resentment that is still harboured unnecessarily on “both sides” of the advice divide. Sad but true.

  12. The FOS is an important part of the protection package that exists for UK financial consumers. I gues the vast majority of us would accept that we need an independent ombudsman to look at those complaints that we cannot resolve directly with the consumer that makes real sense and yes it does need to be paid for.

    My only concern is that we still don’t know what the qualifications are for those who work at the FOS. I have asked to be told this on a couple of occasions and the only answer I got was that they were “experienced and suitably qualified”

    Perhaps Nic you could do us all a great service and ask for a more precise answer from FOS? Are all the adjuducators for example at least Level 4 qualified? And I wonder if the complaint is made against for example a Chartered or Certified Financial Planner is it dealt with by someone of equal professional standing?

    I don’t want to prejudge the answer (but I will!!) but I bet the answer is in the negative

  13. Hi Nick

    Yes I do have evidence.

    Also, I apologise most profoundly. How foolish of me to use the word “melodious” to describe your writings, surely I meant “malodorous”.

  14. Huw Frederickson 8th October 2010 at 12:17 pm

    Nic – my old Mum advised me not to leave the legal profession in favour of financial services twenty years ago, and she was right. It has turned into an awful industry to work in – lots of appalling advisers, rampant regulation and clients that want to pay peanuts for complex work. Frankly the whole mess deserves to be swept away by the RDR tsunami and survival of the fittest will see who has a real value proposition. The endless sniping and carping in the industry says it all – we didn’t get our act together and we now have to pay the price. Our business moved with some pain to a recurrent income model in 2004, so with luck we will have a good long term future. My Mum was still right though…..

  15. If that is the worst example Nic can give of IFA incompetence then we can’t be that bad. Nic is apparently castigating him for omitting to ask “Did you have access to a company pension scheme 4 years ago”? As a financial services journalist Nic’s mind obviously focuses on grounds she has for complaints regarding her existing investments. But in a discussion about her *present* needs and circumstances that question could easily not come up.

    Especially when, according to Nic himself, her previous pension planning wasn’t a primary focus of discussion (he refers to mortgage, protection and regular savings).

    Obviously you’d hope that it would, particularly with £23,000 compensation at stake, but this isn’t on the level of e.g. neglecting to ask a client whether they can afford something.

    You could if you wanted subject any client to a barrage of questions about their existing investments to find out if they have any grounds for a misselling complaint – Did you need this level of cover? Did they go through all the risks involved? and so on ad infinitum – but that’s not usually the focus of a financial planning meeting unless the client shows a particular concern.

  16. Some IFA’s give bad advice ? impossible to argue with that.

    IFA’s tend to give better advice than Tied Advisers ? Looking at complaint figures again difficult to see it any other way.

    Do some advisers make too much of the frailties of the FOS ? Yes probably. Although the FOS really ought to be balanced it is understandable that they tilt in favor of the client from time to time.

    Moving away from commission and requiring higher level exams will improve the FS world ?

    This I very much doubt. Some of the worst and most expensive advice currently being given is being given by highly qualified fee based advisers.

    The general problem is that it is easier to overcharge a client if you do unnecessary work and make the simple look complicated.

    None of this should be a surprise – we are dealing with people after all and being well qualified and not being paid by commission in no way guarantees honesty or an ethical approach.

  17. John Blackmore is absolutuely right being well qualified and not being paid commission does not guarantee honesty or an ethical approach. But then again neither does being poorly qualified and paid by commission.

    Simply change two words in his statement and see the other side of the argument;

    “Some of the worst and most expensive advice currently being given is being given by poorly qualified commission based advisers”

    Of the two which is the better? (honesty and ethical behaviour should be a given for either)

  18. Nic, I think you’ll find that “spelling it wrongly” is more correct. You’re a journalist – come on…

  19. Steven Farrall (Adviser Alliance) 11th October 2010 at 12:19 pm

    The malady lingers on with journalists, many of whom have sold out to the political class.

  20. @Alan Lakey: dear oh, dear Alan you really are scraping the barrel. Poor man. My 13-year-old nephew can do better insults than that.

    @Sam B: there were plenty more examples over the years, this was just one of them that came to mind. The case study had mentioned she was an employee at a company which offered its own DC scheme, in fact she specifically asked whether the performance of her PP had been as good. Bit of a giveaway, I’d have thought.

    @Evan Owen: I never saw the Which? material you claim to have sent me. I did receive an anonymous attachment of a Which? report some years ago which definiteky DID NOT prove what you say. Was that you?

    @ Norm de Plume: yup, fair point. “Wrong” is more idiomatic but “wrongly” is more correct grammar. That said, “wrong” can still be used as an adverb, except not whenever you want an adverb meaning “wrongly”.

    For example, you can get away with “she guessed wrong” but you could never get away with “she guessed wrong that she would see him.” The right word there would have to be “wrongly”.

    Equally, you’d have to say that “I got that one wrong”, where the word is being used as an adverb, is more idiomatically correct than “I got that wrongly”.

    Shakespeare also uses “wrong” as an adverb, occasionally, BTW. But in any case, I’m firmly of the opinion that if your copy is wrong/wrongly in any respect, you should always blame the sub-editor who checked it over…. 😉

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