Just Say No 

This week, the PFS has published its interim guidance on the matter of insistent clients.

You know, these are the folks who come to you with a particular bee in their bonnet, usually some kind of hair-brained idea they have been talked into by a mate down the pub.  They expect you to simply implement what they are asking for, irrespective of the number of clearly-established rules of commonsense that this will drive an articulated truck through.

The PFS is absolutely right about this matter:  Just Say No.

At ValidPath, we've been trying to (sensitively and humanely) deal with this issue over several years.  A little while back, we dealt with the matter again in one of our PracticeBuilder newsletters - because it seems that there's always going to be some new semi-plausible argument in favour of IFAs facilitating certain clients' obsession with shooting themselves in the foot.  There are so many things wrong with this, that it is a challenge to know where to start:

  • If we are in business as professional financial-planners, then presumably we bring to the table a set of beliefs and values which feed into delivering only the best financial outcomes for our clients.  How easy should it be to set those things to one side?
  • Our clients are very far from being well-qualified gurus on financial planning, so we can hardly expect them to know good planning from some kind of questionable wheeze picked up from someone else who is equally ignorant;
  • There is the issue of the IFA's role to be considered:  Trusted Adviser or Order-Taker?
  • Do we really want to build our business on the kind of client who will routinely ignore our advice?
  • The FOS has confirmed that there is no place for IFAs to hide if they have merely 'facilitated' some kind of nonsense, on the instructions of an 'insistent client'.  You can shovel cartloads of extra-robustified compliance and client disclaimers all over the thing - but lying underneath all that flim-flam will be  a highly questionable transaction that will result in redress being paid, should the client make a complaint later on.
Just Say No seems, under the circumstances, to be an excellent piece of advice.

We think it likely that the kinds of advisers which are tempted to accede to the unrealistic demands of insistent clients, will tend to be those which continue to operate a rather transactional business model.  They might think that unless they acquiesce in a piece of muddled insanity, then they won't get paid.

The answer is to ditch the transactional model.  After all, we are now into our third year post-RDR, we really should have moved our propositions over by now onto something that was (a) more sustainable, and (b) less risky.  And something that delivers only excellent financial outcomes.
Kevin Moss, 27/03/2015