Who Is The Most Important Person To Read Your Reports?

I ask new members of staff a question.

“Who do you think is the most important person who will read our advice reports?”

They look at me strangely, smelling a trap. After a few moments they hesitantly go for the obvious answer.

“The client?”

I shake my head, perhaps a little sadly. Confused, they think on, then shrug their shoulders.

“It is,” I say, after a suitably dramatic pause, “the solicitor that the client might appoint in 5 years’ time to take legal action against us.”

People like this: http://goodwinbarrett.co.uk/

If ever you feel like you can’t be bothered to properly write up your meeting notes, or are tempted to cut and paste the next report because it’s pretty much the same advice as the last one, read the case studies on this web site.

A large number of their ‘success’ stories seem to be people who say they didn’t understand the investment risk. A number of the case studies suggest that investments were encashed after a downturn in the market – which, of course, has the effect of crystallising the loss. The phrase “I told them I could not afford to lose this money” also comes up repeatedly, though none of the cases resulted in the client losing all their money (only some, and only because they cashed in).

Many of the claims seem to be against advisers at banks. One wonders whether this is because the advice from banks is more easily challenged or whether they are perceived to be a softer target, more likely to pay out.

I’m all for someone who has been sold something that was not appropriate to their circumstances to have access to redress. Wrongs must be righted.

It does mean, however that we have to write our reports not for the client to understand, but to protect ourselves from the likes of Goodwin Barrett.

This is unlikely to result in reports that are more client friendly – something that the FCA is very keen on (as are we, the adviser community, are we not?).

One solution to both issues is to include objectives in reports, using the clients own words. If we help clients to understand themselves better then we should uncover some deep motivations and maybe even dreams. As Eva suggests in her comment to my recent article on that subject, how many reports have you read which state “Your objective is to transfer all your pensions into a SIPP for us to manage.” That’s not an objective, that is your solution.

It’s a tricky balance trying to satisfy the (at times) conflicting demands of clients and the lawyers. The best method is to seek client motivations and repeat the words that the client used in the report, in quotation marks.

It would be nice to one day be able to say that the client is actually the most important person to read our reports.

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2 thoughts on “Who Is The Most Important Person To Read Your Reports?

  • Chris , isn’t this exactly the opposite of what the industry should now be doing in every sense of the word ?

    We have been mandated through regulation to work for our clients rather than third parties.

    Our remuneration should now be coming from our clients although I accept many still rely on providers and products to create remuneration – adviser charging.

    If you are getting your remuneration from your client as payment for being a part of their financial arrangements – no matter what you think you actually do – then why on earth would you ever do anything which might jeopardise the client being willing to go on paying you ?

    Compliance came about as providers were able to dump product liability onto those they had paid to distribute them. Compliance was and is simply a process invented to protect product distributors against products which failed to deliver. Clever consultants have tried to muddy the water to bring compliance into every facet of life but it remains a process of protection against third party manufacturers.

    Any dialogue between you and your client should be solely for the purpose of helping your client to understand what you are doing with their money and should be in language which works for them alone.

    In the world of service that we now inhabit we should automatically be ensuring that our advice is current and relevant for all of our clients and these days we do all have the technology to ensure that if things change for either party we are aware and able to adjust accordingly. Compliance should no longer be a part of the relationship we have with our client as we should never do anything which our client does not understand fully lest we put our own future income at risk.

    It is true that we live in ever more litigious times and no matter what we do we may find ourselves involved in a dispute over some aspect of our work but that cannot be a rationale for constructing our work with an as yet unknown third party in the process.

    I firmly believe that if you always act with only the best interest of your client in mind and do genuinely look after your client then the illusion of protection brought by compliance will fast become an irrelevance .

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  • I agree with Phil. Compliance people seem to think the best way to protect yourself is write 20 page suitability letters and have clients sign every page and the factfind etc! I’ve long believed the best way is to do the right thing and look after my clients properly. Inevitably this means providing an ongoing service to a small number of clients and not writing transactional business. It has served me well as I have never had a complaint or claim..

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