Is not a Financial Adviser there to advise?

Reports Mark Hoskin, 24th July 2009

In the last week you may be surprised to learn that I have not sold a single product. In fact I cannot remember the last time I did. At Holden & partners we sell a service to help the client manage his finances and advise our clients as to their best options in a fast changing environment. This is a very difficult thing to evalate using a tick box system, because we are not, contrary to the perception, a point of sales operation. This makes it hard to regulate and oversee, but it does make it advice and not sales.

Today we had a visit from our compliance consultant updating us on what we need to do in order to demonstrate to the FSA that we are treating our customers fairly, one of the latest FSA initatives. No one can deny that this is an admirable objective, but from this process it does seem that neither our consultant nor the FSA really know what an adviser does. There still seems to be a view that an adviser is simply there to sell product and treating a customer fairly is all about demonstrating to the FSA that all clients get the same service. To my mind this view can only be coming from the big operators such as the banks, where advice is treated as a numbers game. But in my experience this view of advice could not be further from reality.

Advice is not a formulaic product. What is advice to one client is certainly not to another. Clients are people and as such they are totally different. At a basic level one client might want a meeting every year and that is sufficient and another might be on the phone each week to talk about the best deposit rates. At Holden & Partners we have both types of client, but for me this type of relationship is very rare.

In a successful client relationship the client might pick up the phone and have a chat, just as he might to a collegue at work, or even a family member. Yesterday I went with a client to Nottingham to help him evaluate a start up venture, which he and members of his family had been asked to support. This is a valuable part of our relationship, but it is certainly not applicable to all my clients and not something I would outline as part of normal service or in an inital meeting. As another example, today the advice one of my colleagues gave, was to tell the client to sell his Jaguar and that he could not afford to go on holiday. Both relationships are valid, neither is standard, nor could be identified at outset to a new client, as the FSA would like, as something to expect.

Advice is something that is given and received only in the context of trust and respect between two people. Having the title of adviser does not make you an adviser in anything other than words. Until a relationship is formed advice can be only on the fringes, thus the adviser relationship is not standard. It is different at outset to that which evolves. Each client cannot expect the same service, unless the value in the service is simply thought of as product. We advise on product, that is correct, but that is not the value generator in the advice relationship.

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