Indeed, delegates at one recent conference asked the speaker from the Financial Conduct Authority what the regulatory expectations were in terms of initial and ongoing research.
One of the most interesting answers that came back was that of ‘challenge’.
I have subsequently had conversations with a compliance consultant who independently mentioned exactly the same word.
So what do I mean by ‘challenge’?
In this context I am using the word to refer to a process by which advisers challenge themselves or their colleagues about various aspects of their business, processes, product selection, portfolio construction and so on.
It is about taking some time to stop, take a breath, and ask “Why are we doing this, in this way, for these clients…” with a suitable follow-up question being “… and is there a better way to achieve a better outcome, for our clients, and for our business?”
For many advisers this challenge happens quite frequently in the context of portfolio review, as we debate whether to change our approach to asset allocation, switch from growth to value, favour equities over bonds, increase allocations to property and so on.
Advisers may also challenge their own thinking as they listen to presentations about the future of interest rates and impact of potential changes on clients and their savings and investment strategies.
Another area where we see such challenge is in the merits or otherwise of active or passive investment strategies, or in the value and use of multi-asset and multi-manager funds.
Attending roadshows or conferences and walking away thinking “What is the implication of that new piece of knowledge for my clients and my business?” demonstrates a challenge to your existing way of thinking and operating.
Remember, clients can challenge too.
Advisers may find clients asking “Why do you do it that way?”
Simply the act of remembering your initial proposition design and implementation process, and then explaining your logic to a client might cause you to wonder if that is still the best way, if that’s still the best approach, if that’s still the most appropriate view of markets.
Taking on new staff can also provide a challenge to a business’s status quo.
I cannot be the only person who, when asking why a particular process is in place, is so frustrated to be told “we’ve always done it that way”.
New advisers or paraplanners or administrators are likely to ask questions, or bring ideas from other firms.
Asking you how you go through the fact-finding process, or explaining how they undertook investment research elsewhere may challenge you to think again about how you go about their business, and whether any improvements could be necessary or desirable.
