Letter to Money Marketing

Hi John

 

How Customer Agreed Remuneration (CAR) can backfire

 

I was interested to read Julian Stevens' letter in your 24 January 2008 issue, essentially relating how he was unprepared to deal with an assertive client seeking to negotiate costs downwards.

 

This I believe will become more common, as CAR allows clients to actively engage with the idea of adviser remuneration.

 

Whilst I will understand if the first time this happens to an adviser, it might feel bruising or uncomfortable, please consider the position from the client's point of view.

 

When they deal with a plumber or electrician they can negotiate, so why not with an adviser. If I was in the client's shoes, I certainly would want to.

 

Julian Stevens deserves much credit for being so candid, firstly admitting he was caught unprepared, and secondly saying that he stood his ground in his subsequent letter to the client, by standing by his charges and justifying them and potentially losing the client.

 

The issue for the client then becomes focused on the value they associate with the service and whether they want to pay for that (which is where it should always have been focused).  

 

Advisers will have to be prepared to draw a line and only conduct business on financially sustainable terms, which ultimately means turning some potential clients away.

 

Like it or lump it, this is I believe a glimpse of the future for adviser / client relationships. 

 

Kind regards,

 

Robin

 

Dr R W Keyte  -  Director, Chartered Financial Planner & CERTIFIED FINANCIAL PLANNER CM      
Towers of Taunton (Financial Services) Ltd

Letter to Financial Adviser Newspaper

I refer to your 17 Jan 2008 edition and the letter from Sam Caunt.

All I wish to do is put him right in his assertion that an IFA that deals with ethical investments gives limited advice.

My comments refer to the members of the Ethical Investment Association, which provide a representative sample of IFAs giving advice on ethical investments.

Most EIA members do indeed advise on products outside of the ethical investment sphere, as not all of their clients choose to use ethical investments.

There is no sense at all that such advisers offer limited advice.

Indeed, you could say the converse is true, IFAs that do not ask their clients an open ethical question (like "do you have any social, ethical or environmental concerns that you would like us to take into account in our advice") are limiting their advice.

Ultimately, asking the 'ethical question' is not a threat to business, you will never lose a new client enquiry by asking the question.

However you may well lose a client by NOT asking it.

It is understandable that most IFAs are reticent about this area as the financial planning certificate (FPC) and related exams did not cover it, so there is a lack of knowledge.

That can easily be put right by:

- visiting the UK Social Investment Forum website (http://www.uksif.org/) and taking part in their freely available web-based training

- visiting one of the free quarterly meetings of the EIA, aimed at supporting the training needs for IFAs in this area (http://www.ethicalinvestment.org.uk/index.html)

Regards
Robin Keyte

Dr R W Keyte - Chartered Financial Planner & CERTIFIED FINANCIAL PLANNER CM
Chair of the Ethical Investment Association