Earn your keep by going back to basics

Okay, that is not entirely true. I once had a woman who found out she was advised to go in to a structured product that was much more high risk than she hoped. 

She had made returns beyond her expectations, but had now realised that at 70, she should never have been in that product in the first place.

That is the hardest thing for many consumers to get over in this market meltdown — there is no one at whom to point the finger

But what was the ombudsman supposed to do in this case: put her back in the position she should have been in?

In which case, that would have made her worse off.

It is only sharp falls in equity prices that prompt widespread mis-selling claims, and that is why the current situation is a particular risk to asset managers and financial advisers.

In many cases advisers will not have done anything wrong, but disappointment at a falling market can leave a bad taste in the mouth and a search for someone to blame.

In a way, that is the hardest thing for many consumers to get over in this market meltdown — there is no one at whom to point the finger.

During the last financial crisis you could take your pick, whether you thought it was those dastardly bankers, reckless brokers or feckless borrowers.

But there is no one at fault for an economy in lockdown because of a pandemic.

Having no one to blame means investors may want to find fault — even those who took advantage of the pension freedoms and became DIY passive investors, and are likely to have substantial exposure to equities.

I have not seen too many grumbles (so far) from clients of financial advisers; if anything, I have actually seen retirement strategies that have been working spectacularly well.

But that does not mean the risks should be overlooked.

Some people will always feel hard done by, even if their loss is only theoretical – that is, a lowering of expectations.

This is where that old, and very underrated skill of communication comes into the equation.

The advisers that fare the best tend to be the ones that have good, lasting relationships with their clients.

That may sound like a statement of the bleeding obvious, but too often those non-core clients (read, less profitable), and the more troublesome ones are those that get overlooked.

In these times too we have an added challenge, in that you cannot meet anyone face-to-face.

Quite what you communicate is another matter.

As we have seen from the ludicrous Mifid II updates about market falls (thankfully now put on hold until October, according to the regulator), some information can be more damaging than others.

What is needed is a back-to-basics approach about goals and outcomes.

It means taking the time to go back over investment strategies, explaining why assets have been placed where they are, and re-emphasising tax advantages.

This is the dull end of financial planning, but it is the most important. And it is the one that reduces risk.

These are the moments where you earn your ongoing fees.

Trigger point

Is a new personal indemnity cover timebomb about to blow up?

If the warnings from the Personal Finance Society, in its calls for extensions on cover are anything to go by, it certainly seems that is the case.

Mis-selling claims and onerous restrictions on advice have already made taking out PI a nightmare for some companies, not least as qualification requirements seem to move constantly.

But with insurers struggling to assess risks following the coronavirus crisis, it seems likely businesses are going to struggle to even renew.

Calls for HM Treasury to effectively become an insurer of last resort are well meant, but ultimately unrealistic.

Pick your battles

Quite why Rishi Sunak bothered to raise the issue of raising national insurance for the self-employed is beyond me.

The chancellor had achieved great kudos for his handling of the crisis so far, and did not need to pick a fight with the very sector he wanted to help. 

Higher national insurance for the self-employed has been on the cards ever since the new state pension was introduced, when the state second pension was scrapped.

Taking on the self-employed is a bold move. These workers already feel hard done by and at a considerable disadvantage. 

This was a battle Mr Sunak could have saved for another day. 

James Coney is money editor of The Times and The Sunday Times