I suppose it’s that old “Who owns the client?” thing again

At the Pensions Network for the last 24 hours.  Extremely clever and thoughtful DWP civil servant, Charlotte Clark, made an excellent presentation titled “Have Pensions Ever Been More Interesting?”,  and I think the answer quite genuinely is probably “No.”

My good friend and fairly regular client Alastair Conway, now CEO at James Hay, made another very good presentation about how a platform business like his can evolve to work effectively in a world where – as demonstrated by the research in Holly Mackay’s and my Platforum D2C reports – the large majority of consumers who take financial advice go in for some execution-only, non-advised activity as well.

Alastair kindly gave our research several very convincing plugs, and more importantly made it clear that it had greatly influenced his thinking on the James Hay development strategy.  But I was interested to notice that in one key respect, he had interpreted the research very differently from me.

The way he imagined things, the adviser is in charge of the situation.  The adviser maintains a close and continuing relationship with the client, and takes the initiative when there’s anything important to discuss or decide.  But, recognising that in today’s world of adviser charging  it’s not good value to spend two or three chargeable hours sorting out something fairly trivial like the client’s annual ISA investment, the adviser politely stands aside and encourages the client to do this on a DIY basis.

I’m sure that’s sometimes exactly how it is, and it may be that in the world of ongoing adviser charging it’s like that slightly more often than it used to be.  But much more often, I don’t think it has been like that at all.  The overwhelming majority of IFAs – not all, but the overwhelming majority – have been sales-driven product-pushers with very little interest in maintaining client relationships unless they’re sure that more initial and renewal commission are available in the near future.  It’s therefore for the client to decide whether or not to involve the adviser in any forthcoming investment decision.  If the client feels happy choosing an ISA without advice, then he or she will go ahead on an execution-only basis.  If the client does feel the need for advice, then he or she will call in the adviser, at the cost of 3% initial and 50 bps trail commission taken out of the investment.

The move from commission to adviser charging is supposed to be changing this sales-driven, commission-hunting approach.  The main difference is that when advisers are involved, they’re not supposed to take an ongoing adviser charge in return for no ongoing service, as most have always done with trail commission.    But I strongly suspect that among the majority of advisers, the resulting change in mind-set will happen very slowly, if at all.

Over the years, I’ve noticed on dozens if not hundreds of occasions that those on the industry side persist in what seems to me an entirely false and excessively rose-tinted picture of the typical relationship between adviser and client.  (I do recognise that there are some, especially those involved high net worth clients and advisers providing a true financial planning service, where a certain amount of rose-tinting is justified.)  Nothing highlights these false perceptions better than the often-expressed idea that it’s the adviser who “owns” the client.  Most of the time, this is totally wrong.  The client owns the client.  And, especially in the post-RDR adviser charging world, more often than not the client “owns” the adviser too.

You get two tribes at awards dinners. And not just winners and losers.

To the Guildhall on Tuesday night for the Financial Services Forum Marketing Effectiveness Awards.  Two miscellaneous observations:

–  As a judge, I really do think it’s important to see the awards actually given out because it’s always salutary to be reminded just how much they mean to the people who win them. I don’t suppose their joy lasts very long – maybe not even till the following day – but at the time, it’s huge.  The people at the winning tables are ecstatic.  It’s something we judges should remember if ever we’re feeling a bit tired or hungry or bored or whatever and are inclined to be anything less than diligent when looking at the last category before the lunch break.

–  I must say (might well have said this a year ago) that these FSF Awards have achieved something you’d have said was impossible, which is to introduce a major innovation in the format of the evening which works brilliantly and makes it all a good deal more enjoyable.  Unlike any other awards ceremony I’ve ever seen, the winners don’t traipse up to the platform to collect their prizes:  their prizes are brought to them, at their tables.  And not just by anyone, but by the rugby-star-turned-TV-personality Matt Dawson (with a cameraman in close attendance), who does a wonderful job of bantering with the winners and making everyone feel good about the whole business.  Just goes to show:  challenge everything, because there’s always a better way.

Anyway, none of that was what I wanted to write about.  I only have one short and simple point to make, based on the behaviour of the 500 or so of us attending at the point when the awards ceremony itself came to an end a little after 11pm.  That’s when my two-tribes observation came to mind

The first tribe is made up of those for whom the end of the awards ceremony marks, more or less, the end of the evening.  Released from our tables, we may go and shake hands with a few old friends we’ve noticed around the place.  But either because we’re tired, or because we’ve got early starts in the morning, or because we’re worried about last trains, or just because it’s too bloody noisy once the disco gets started, or just because we’re old, within about fifteen minutes we’re in the cloakroom queue to get our coats and briefcases.

The second tribe is made up of those for whom the end of the awards ceremony marks, more or less, the beginning of the evening.  Released from their tables, they head pretty quickly down to the crypt, where there is music and a free bar.  So far, quite frankly, there has been little to enjoy – boring speeches, mediocre food, social interaction limited largely to the people sitting on either side, even Matt Dawson wasn’t very interesting after the first few minutes – but now the rest of the night has some potential.  Anything could happen.  And for the large number of out-of-town attendees staying overnight, anything could go on happening until a remarkably late hour.

I don’t suppose I need to bother explaining which tribe I belong to.  And something else which doesn’t need much explaining:  which of the tribes is likely to have had a brilliant evening, and which thought it was all extremely dull.

Should I have gone to prison for this? Come to that, should I still??

(Sorry, this is one of the occasional blogs that has nothing at all to do with financial services marketing, just in case you’re waiting for me to work my way round to it.)

Back at the beginning of the seventies, when I was in my mid-teens, I was one of a group of a dozen or so friends who spent a lot of time in each other’s company

We were a pretty homogeneous bunch – all much the same age, from much the same middle-class backgrounds and going to much the same schools, although in segregated Guildford that meant the grammar school for the boys and the county school for the girls.  But there were a couple of outliers in the group.   Pete was older, 23 or so, working class, had left school at 16 and worked on building sites since.  He was good-looking, had money in his pocket and a pretty much genuine bad-boy image:  needless to say, the boys were jealous of him and the girls all fancied him.  Cordelia was the youngest, only 14 – very smart, very gorgeous and very, very fucked up.

Needless to say, Pete pursued Cordelia relentlessly.  And needless to say, he succeeded:  they became an item.  As far as I could see, this meant two main things.  First, she acted more or less as a one-girl service industry to Pete, meeting his incessant requests for cups of tea and sorties to the cigarette machine.  And second, they spent a great deal of time together having sex, taking drugs and drinking vodka.

At the time, I don’t think any of the rest of us had any very strong reaction to any of this except jealousy.  I certainly don’t think we mustered any quantity of disapproval between all of us.

But looking back on it through today’s perspective, of course, it all looks very different.  In today’s language, we’d say that Pete groomed Cordelia very deliberately until she came under his control – and then, when she did, he proceeded to abuse her mercilessly, sexually and in a bunch of other ways.  What he did was wicked and evil.  If he’d been caught he should certainly have been sent to prison.  And I guess there’d be a strong aiding-and-abetting charge against the rest of us.

I haven’t really got anywhere further to go with this.  Perspectives have changed.  At the time, it would never for a moment have occurred to Pete, Cordelia or any of the rest of us that anything remotely criminal was going on.  Today, it’s obvious to everyone that it was.  There was no question of any of the more appalling practices revealed in recent trials of individuals and groups of individuals for their behaviour in those days and more recently.  But sex, drugs and alcohol, and a fourteen-year-old girl – it would still make a good story for the red-tops.

Am I saying that you can’t judge what happened in the past by the standards of the present?  No, in general I’m absolutely not saying that.   Most if not all of the elderly blokes hauled through the courts in recent years had done terrible things, and it’s good that the law caught up with them.

Perhaps all I’m saying is that quite often, the more closely you look at any event the more ambiguous it looks and the harder it becomes to figure out what it really means.  But that, I can’t deny, would be a boring and inconclusively Libran note to finish on.