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Taking care of your business

This article is part of
Guide to handling insistent clients

Taking care of your business

It is vital that advisers seek to protect their business from insistent clients who may become disgruntled by their advice at a later stage, and make a claim. 

So, what can they do, to minimise risk?

Turning insistent clients away is a popular choice for avoiding potential pain later.

Paul Allan, a financial adviser at Wren Sterling, says: “The best tack to take is not to take the business from insistent clients in the first place. It presents a considerable risk.”

William Hunter, founder of Hunter Wealth Management in Edinburgh, agrees: “We don’t work with insistent clients at all. We don’t think it’s the right thing to do, so we don’t facilitate it.

“Why do something that you don’t think is right?”

Carl Lamb, managing director of Norwich-based Almary Green, another adviser who does not work with insistent clients, believes the industry has a serious problem on its hands.

He says: “We’re walking into a massive mis-selling scandal with DB pension transfers. It will make PPI look like a walk in the park.”

The knowledge

One way for advisers to avoid DB pension transfer problems generally is to further enhance their pensions knowledge, according to the Personal Finance Society.

Chief executive, Keith Richards, says: “We recommend financial advisers join the hundreds of professional advisers who have already signed up to the Pension Transfer Gold Standard.”

The Standard is a commitment to deliver on nine principles of good practice when giving pensions advice, which were produced by the Pensions Advice Taskforce.

It was created as a result of the pension transfer issues arising around the closure of the British Steel Pension Scheme in early 2018, and public statements of concern about the practices of some advisers.

The nine principles focus on:

  • helping clients understand when advice is appropriate;
  • ensuring the advice supports the client’s overall wellbeing, within the context of their objectives;
  • ensuring client understanding and acceptance of all charges;
  • ensuring the most appropriate and updated technical skills are applied;
  • transparent management of conflicts of interest;
  • helping clients understand the cost of transferring benefits;
  • avoiding unregulated investments and introducers;
  • and transparency in advice processes and outcomes.

The principles also advocate promoting the Consumer Guide to the Pension Transfer Gold Standard.

Resting your case

Robert Morris, a partner at RPC solicitors, also believes that in-depth knowledge is key for protecting advisers from insistent clients – as is client communication and clarity.

He explains: “The first thing to do is to look at the FCA’s handbook (COBS section 9.5a) where there is specific guidance for firms on how to deal with insistent clients.

“These are not rules, technically speaking, but clearly the FCA and Fos expect them to be followed. This is a good starting point.”

He adds: “It is also crucial for the firm to provide full and reasoned advice in a letter stating why they advise the client not to proceed with the DB transfer, to explain what the risks are if they do go ahead and to make it very clear why the firm believes this is not appropriate − even if they know the client will ignore it. The client has to understand the downsides.”