In particular, I argued that, rightly or wrongly, IFAs were not immune from this growing public antipathy and would need to work extra hard to show how their distinctive values made them different and more worthy of their clients’ trust.
I did not think I was saying anything particularly outrageous or very new at the time.
Yet that did not prevent one adviser who shall remain nameless from sending me several emails, one of them almost 2,000 words long, explaining in mind-numbing detail exactly why he felt he was different from a salesman working for a bank or an insurance company.
It can safely be said that ours was not a meeting of minds. To my repeated suggestions that the issue was not what he thought about himself but what others felt about him, I kept on getting longer and longer disquisitions on what it means to be an IFA. All valid points – and all of them irrelevant.
Then, last week, there came a potential eureka moment in the form of a document from Aifa called, Restoring Trust in Financial Services: Build On That Which Works.
The starting proposition of this report is simple: “There is growing concern about the decline of consumer trust in financial service institutions (FSIs), a concern which has been exacerbated by the actions of some FSIs, changes in tax or regulatory policy, negative media coverage and the events of the past year.
“Retail financial services has not experienced such a period of economic turmoil since the Great Depression. Recent research confirms the significance attached to trust and suggests that consumers may have become disengaged from the industry as a result. This disengagement means they are not making effec- tive financial decisions, planning for their long- term financial wellbeing or making sufficient provision for themselves.”
The opening premise is a great – albeit, a fairly obvious – one, as I would be the first to admit, having said much the same thing for a long time.
The problem for this document, however, is that it does not go very far beyond this point.
The first thing you notice as you plough through its 28 pages is how self-congratulatory the report is. Page after page is dominated by a succession of graphs used to illustrate findings from the so-called financial services “trust index”, developed at the University of Nottingham on behalf of the Financial Services Research Forum.
Given that this is an Aifa publication, perhaps we should not be surprised at the fact that each of these graphics demonstrates conclusively that advisers are more trusted by the public than other sections of the financial services industry.
By using a baseline that starts barely below the worst-offending institutions, invariably banks or insurers, it is possible to present IFAs as being way out in front in the popularity stakes.
When you look more closely, in many cases, the level of trust between, say, a building society and an independent adviser are only a few points from each other.
Still, let’s not be churlish. It is undeniably true that IFAs are regarded as more trustworthy than typical life insurance salespeople. But why should that be so surprising? After all, IFAs occupy unique positions in the industry. Their clients are often, although not always, more affluent, better educated and marginally more questioning than those who go to a bank salesperson for advice.
It is inevitable that they will score higher than most of their client-facing counterparts in the industry.
But even if we accept that, purely by virtue of their marginally higher public approval ratings, IFAs should have an input into the debate on trust in financial services institutions, are there lessons that prove the IFA model is incomparably better than all the others?
Certainly, the notion of genuinely independent advice, of long-term financial planning and wealth management, of the adviser as the defender of the client and always on his or her side is a powerful one.
In that sense, although Aifa does not make enough of this potential role, its attempt to force a distinction by the FSA between IFAs and salespeople is correct.
But the difficulty for Aifa, and therefore for any consumer reading its publication, is that nowhere does it appear to recognise that there are major issues the IFA community also needs to address. Issues of competence, professionalism, genuine independence and best advice, remuneration and continuous service.
What we are presented with is a manifesto for change but not for IFAs. They are unique in the financial services industry in needing to do nothing more in order to earn their clients’ trust. Can that really be right? Somehow, I don’t think so.
Nic Cicutti can be contacted at email@example.com