Investments  

Brexit sees surge in insistent clients demanding cash

Mr McDermott added his firm has never used cash funds and clients can instead use a cash holding facility on the platform.

Simon Mansell, managing director and IFA at Temple Bar, said the immediate reaction for uneducated investors can be to move as far away from shares as possible, and towards less risky assets like cash and fixed interest securities.

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“But why have an adviser if the client instructs the adviser to park funds in cash?” he said, adding fund management is about education.

Mr Mansell also said some advisers could be using the ‘defensive medicine’ approach by recommending investments which are not necessarily the best option for clients to protect themselves from litigation.

Back in 2015, the Financial Conduct Authority’s technical specialist Rory Percival outlined a three-step process to help advisers not get caught out by insistent clients.

He said they should provide advice in a concise manner, emphasising the need to ensure the client’s understanding of the recommendations.

Secondly, advisers should make clear what the risks are if a client wishes to go down a different route to the one the adviser has recommended. Finally, if the client decides to go ahead, advisers must be clear that this was not their recommendation.

Everything should be well documented, the FCA added.

But many in the industry said they believed even if they followed the FCA’s guidance on how to handle insistent clients they could still face future claims via the Financial Ombudsman Service.

katherine.denham@ft.com