I got really worried when ‘due diligence’ became the new buzzwords. It was about the time that Arch Cru was kicking off and everyone was being incredibly clever after the event. Suddenly, every sentence included the phrase ‘due diligence’ even if it was talking about stationery supplies.
Don’t get me wrong, this is a good thing. My rant is that more and more people are confusing research and due diligence, and I’d really like to see a consistent understanding in the profession. Research is assessing how the characteristics and features of a product can be used to help a firm deliver its service.
The stage of approach should be that the client segments are defined and then the service delivered to each segment is designed. At this point, research is conducted to find a shortlist of products that have the right characteristics and features to be used to deliver the service.
Due diligence is the analysis undertaken on an organisation delivering a product to consider its legitimacy as a commercial entity. It is nothing to do with functionality or tax wrappers, but how its executives are remunerated and what its accounts are like.
All these will influence how well you can deliver your service, so your reputation is as much at risk as your clients’ investments. Doing good due diligence is essential – just don’t put the cart before the horse.
Damian Davies is director of The Timebank
