Cold calling is a minefield if not approached in the right manner, but can be an opportune method for advisers to expand their practice, according to Graham Dragon.
Many financial advisers share the common misconception that cold calling is illegal, and misusing the marketing method could result in a criminal record, the chief legal officer at Cadde Wealth Management and Adviser Breakthrough said.
Cold calling is illegal when selling financial products in most circumstances, he said, but is acceptable if it is made clear that the proposition is a generally marketable packaged product. Also, the product must not have any high-volatility funds or be linked to them, Mr Dragon added.
“The correct way to cold call in the financial services arena is simply to introduce yourself and the range of services your practice can offer,” Mr Dragon said.
“Your purpose is not to sell a product but to arrange a meeting so you and your prospective client can see if there is potential for an ongoing professional relationship. This is both legal and ethical.
Obtaining the right list of people to call is the first port of call for advisers, according to Mr Dragon, adding that those who use phone directories to find people to cold call risk being sued by the list owner.
Having obtained the list of contacts, the next step is to exclude anyone who has registered with the Telephone Preference Service (TPS) or Corporate Telephone Preference Service – for business numbers.
These services allow UK consumers to opt out of receiving telemarketing calls. Firms that call individuals registered to these services face fines.
Mr Dragon said: “You will also find the FCA will look very dimly on your practice and may withdraw your authorisation.”
The right to opt out of receiving cold calls is not solely reserved for those who are subscribed to TPS or CTPS, but to anyone who asks a company that has cold called him to stop doing so. Firms are legally required to follow this instruction.
The next step, therefore, is to maintain a list of numbers not to call, Mr Dragon said.
Step four is to make calls during reasonable hours – unless the recipient has specifically asked for the call to be made outside these hours, Mr Dragon said.
Lastly, advisers should contemplate what to say ahead of the phone call.
Mr Dragon said :“At the start of your call you must identify who you are, the firm you represent, and the reason for your call. You must then ask for permission to continue the call.
He added: “If you do begin fact-finding this means you have started the sales process, and if the sale ends up being a financial product which is not exempt under COBS 4.8 you will have broken the law.”
Nigel Sycamore, director of West Yorkshire-based Clear Workplace, said: “I would agree that cold calling is a minefield. Cold calling does not have a good reputation, so financial advisers need to be aware of how their business is perceived.”