Why doesn’t the average man on the street trust the financial services industry?
Forget about the credit crunch, bankers’ bonuses, headlines screaming about payment protection insurance mis-selling scandals, etc.
I’ll tell you why people don't trust this industry: there is no reward for loyalty.
Two stories illustrated this fact this week.
What never ceases to amaze me is how providers are swift to contact clients when it could result in them making them more money.
Aegon came under fire for allegedly poaching clients from advisers via an automatic upgrade process.
The firm has been accused of writing to clients to inform them their account is going to be "upgraded" if their adviser has not contacted them within a 12-month period – without notifying the intermediary of its plans.
If the customer fails to reply stating they do not wish to be upgraded, their policies are automatically moved onto Aegon’s direct to consumer Retiready platform.
There is nothing wrong with upgrading clients – who wouldn’t take a first class seat on a plane if offered to them free of charge when all they purchased was standard class.
But what the problem is here is the fact the provider went straight to the client rather than spoke to the adviser who introduced them.
These clients chose a financial adviser. They chose a financial adviser rather than going direct to a provider because they wanted the best solution for their needs from the whole of the market.
If they are no longer getting that, then that could be because the client has decided they are happy with what they have and don’t want to make regular changes to where their cash is held.
Providers should not offer “upgrades” – if they are generally concerned a policyholder is orphaned then they should contact the adviser who introduced the client in the first place to see if there is still a relationship.
If the adviser says they do still have a relationship with the client then that is the end of the matter.
If the provider doesn’t hear from the adviser, only then could a letter be sent to the client stating: “We are pleased you continue to have a policy with us. If you seek further assistance or to check if this is still the right solution for you contact a financial adviser.”
The provider should then list other active financial advisers in the client’s area.
Because ultimately – hate to break it to you providers – anything else will be seen as poaching.
On the flipside of Aegon, the Citizens Advice Bureau proved how providers don’t utter a word if it means they can pocket extra cash.