T&C – To be or not to be …holistic


I have, for many years, tried to encourage advisers try to become more holistic in their approach to giving financial advice. I think it’s fair to say that this doesn’t apply to all advisers. Many, of course, are holistic and provide an all-round financial service, but equally there are many don’t see this in the same light.

There are, of course, a number of reasons for this. Firstly, it is so easy to deal with what’s in front of you. This is known as “picking the lowest fruit from the tree”. A client approaches an adviser and says they want pension advice. So that’s what they’re given. Pension advice.

Then, because that’s what the client wants, some advisers are almost reluctant to explore other areas of advice. Perhaps this is because they feel it will put the client off from dealing with them and that by expanding the conversation this will be too much. So basic information will be acquired on the rest of the clients’ circumstances. That’s often just to make the file stack up on inspection.

Maybe they’ve forgotten how to explore certain areas because they’ve spent too long dealing with other areas of advice

Perhaps the adviser’s own knowledge of certain areas of advice is not as good as it should be. Maybe they’ve forgotten how to explore certain areas because they’ve spent too long dealing with other areas of advice. Yes, I am talking about protection advice here. Protection is not as lucrative financially as lump sum investments, both initially or on an ongoing basis.

Which brings us to what, in my opinion, is the main barrier to being holistic. The environment in which many advisers work is all about getting funds under management, which gives an adviser an ongoing income and the potential to sell their business at some point in the future. Protection is excluded, and likewise regular premium business for any area of financial planning. Many firms have moved to a proposition where they have a minimum investment amount, therefore excluding a proportion of potential clients because they don’t have sufficient funds to warrant the fees for the advice. That’s fine. I get that. But it also excludes a number of other areas worth exploring further.

I’m not saying anything new here. We all know how it works. There’s a good chance that a firms’ client bank will be made up of a high proportion of retired or near-retired clients. For many firms the typical spread of business is likely to include protection as single figures as a percentage, and probably the same or less of regular premium business.

My question here is are we happy with this? If we are, then fine. I put it to any owner of a firm, or just working as a financial adviser, that in my opinion, they’re missing a trick. Several tricks actually.

Let’s dispense with the firm’s proposition for a moment and consider what the role of a financial adviser is. I looked at Google for this and came up with various different answers. Likewise the FCA definition varies. It’s down to our own individual interpretations. Mine is that a financial adviser considers a clients’ overall circumstances, financially and aspirational, and recommends appropriate solutions that cover that clients’ needs and objectives. In other words, holistic advice.

Now if I bring back a typical firms’ proposition an adviser may find that their hands may be tied to being holistic for any number of reasons. What do they miss out on? Well, there’s an income stream from lump sum investments below the minimum set by the firm, regular premium business and commission based business (there’s that word “protection” again) that they won’t be looking for, and therefore not getting. That could mean that they are also missing out on opportunities to build their client bank for both now and for the future. They’re missing out on acquiring a more sustainable client bank by taking on clients perhaps in their forties and fifties, instead of the usual “clients with money”, or the retired and semi-retired. They’re also missing out on possible referrals from these clients that they have discarded whom could turn out to produce more lucrative business. They could be missing out on bringing on board clients because in their mind they’re not ready yet, for example planning early for potential scenarios such as making provision for a potential Inheritance Tax liability. Probably most important of all from a Training and Competence(T&C) perspective, they’re not keeping their knowledge across all financial products up to speed.

Just on that last point why not have a look at your advisers CPD records. Pre this year, how much was covered by investments and pensions? It’s a good job then that we have the new requirement for Insurance Distribution Directive CPD. Or you might be inclined to set specific protection-related competency tests covering the full range of protection products. Give it a go. The results will probably not be a surprise. But what both IDD CPD and protection tests will do is send a message that might hopefully refocus firm’s propositions and encourage advisers to become more holistic. And that, surely, can only be a good thing.





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I am a highly-versatile and forward thinking management professional with a history of successful delivery across more than thirty years’ in the Financial Services Industry. Core skills include assessing, training, coaching, process design and implementation, specialising in people, processes, and procedures within a Training & Competence or Learning & Development framework. Periodic writer for T-C News.com

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