Cut through the comments made by the regulator this week and you will spot that the regulator clearly states what they expect from you in 2015.
This week the Financial Conduct Authority and Financial Ombudsman Service made yet more comments on what you should do with ‘insistent clients’, while research was published revealing how consumers approach obtaining a home loan.
The regulator revealed that many customers form an initial preference for fixed rate products before seeking advice. They think interest rates are likely to rise in the near future and therefore visit a mortgage adviser with the notion that fixes are the best option.
The FCA concluded that customers often develop an early view about which type of mortgage product will best meet their needs – and often place strong emphasis on this initial choice throughout the advice process.
“Some also mistakenly believe the adviser’s role is only to find a product which meets their initial preferences and initial target monthly payment, and do not expect advisers to challenge them, or to spend significant amounts of time discussing their needs, circumstances or priorities,” read the report.
“Many advisers place a great deal of weight on customer’s initial preferences – and in some cases, allow these to determine the recommendation, rather than taking reasonable steps to obtain all relevant information and assess suitability in light of the customer’s actual needs and circumstances.”
The regulator noted that advisers must still assess a customer’s needs and the appropriateness of this in light of their individual circumstances by applying judgement.
The research produced for the FCA found that consumers delude themselvesMeanwhile, at an Association of Professional Financial Advisers’ event earlier in the week, the regulator said advisers should tell insistent clients to put in writing why they chose to ignore advice.
Retail technical specialist Rory Percival said advisers must make it clear that insistent clients are acting against advice and risk warnings, adding that “you can’t argue with something in their own words”.
So basically, the powers that be seem to be stating that an adviser’s job in 2015 is to tell a consumer what is best for them.
Even if the client wants something else, you must cut through their misconceptions about what suits them best and say what would be the best fit for their circumstances.
They want you to be the financial equivalent of Gok Wan or Trinny and Susannah, tutting and sighing through attempts to squeeze into a mortgage that won’t fit or an investment they might find all their money falling out of.
However, while the FCA is clearly spelling out what it expects you to deliver, I feel sympathy for advisers, as the regulator needs to be clearer on how to deliver the equivalent of “your bum looks too big in that”.
The research produced for the FCA found that consumers delude themselves. They are overly optimistic about their future.
Most consumers believe the sun will always shine and they will always be fit, healthy, employed and able to meet their financial commitments.
What would be great to see from the regulator – and hopefully could be delivered in their follow-up to the disclosure paper they produced last month – is how to cut through a consumer’s biases and false view of their predicament.
An adviser’s recommendation can only ever be as good as the information they receive from the client.
emma.hughes@ft.com
