When you heard that some advisers at Chase de Vere earned hundreds of thousands of pounds for making around double that in fees and were now being rewarded with a luxury overseas trip, did you think:
1. Nothing wrong with that.
2. I wonder what her clients make of that?
3. I wish I had earned that much.
If your answer is anything other than ‘2’ then I am afraid that you are part of the cultural problem of financial advice. This industry is all about the client – nothing else matters.
Not every customer is going to be happy. Mistakes will get made.
This industry is all about the client – nothing else matters.But provided the outcome for the client is at the centre of every decision then no one – neither the regulator, the press or other financial advisers – can really grumble.
This is the core problem with those handful of companies that place a focus on sales incentives, and it is part of the reason St James’s Place has been quick to remodel its business for modern times.
There is nothing wrong with success and there is nothing wrong with being handsomely paid. But earning more than some chief executives really does have to be questioned.
Chase de Vere has managed to avoid the prying eyes of the press up to now, which is presumably why it reacted with such surprise at the scrutiny it is now getting.
But this is a company that offers an overseas incentive, which is unveiled with all the pomp of a gameshow top prize.
Its annual meeting, which this year was held in Manchester, had as its centrepiece an Oscars-style ceremony where the advisers who have generated the most fees are lauded on stage.
I have seen a video of it: a band plays live music, chief executive Stephen Kavanagh offers gushing praise, and how much they generated in fees is shown on a big screen.
Chase de Vere denied that this ceremony was all about fees, but that is not the over-riding impression I was left with when I saw it – it was all very much about the money.
Those who are called up are invited on the annual overseas incentive, which ‘Kav’ as he likes to call himself, describes in one instance as “a golden ticket”.
The league tables it routinely sends out to advisers also seem to be all about the money; I have seen them too – they are a list of fees and earnings generated by advisers.
All of this is the wrong impression.
The focus is not on client outcomes but on the advisers.
In every big company there are those who are driven solely by doing the right thing for clients – they make up the majority of advisers I speak to.
There are always rotten apples though, and if you have an incentive scheme that rewards sales then that will always encourage them to make bad choices.
Plus there is the danger with rot that it spreads to more healthy parts of a business.
SJP has ended its overseas incentives, acknowledging they are inappropriate in the modern day.
The Pru has also ended its overseas incentives for salespeople.
For the general public these types of holidays are distasteful, particularly when their money is paying for it.
Chase de Vere and other companies that cling onto this relic must scrap theirs too.
It is not about them – it is about the clients.
A great step for transparency
Heavens, a Financial Conduct Authority initiative that I love.
The new value assessments that funds are being forced to put out are a thing of beauty.
So far only Rathbones, Vanguard and Hargreaves Lansdown have published, but they have been startling in their admission that some of the unit trusts have been very poor indeed.
It is a remarkable step forward for transparency, as they are also written in very simple, plain English.
What a shame then that they are hugely difficult to find on websites, though I do hear that Vanguard is going provide a link in the company’s next letter to savers.
What a great start.
Time to play fair
My dad has insurance with Sainsbury’s underwritten by LV.
He searched for a new quote on a comparison website; the cheapest was £200 less than he pays now, with – you guessed it – LV.
These shoddy pricing practices are really tiresome.
When will the general insurance industry learn to start playing fair by customers?
James Coney is money editor of The Times and The Sunday Times
This article has been amended to remove a reference to advisers earning more than FTSE 100 chief executives, and to clarify that league tables sent to advisers show the money they generate for the company, not their salaries.
