When I started my own adviser practice back in 1988 I was very conscious about professional image. I was also very aware that criticising peers and competitors was not the way to go when trying to build my own ‘brand” or attract new clients, it was breaking the golden rule of not ‘knocking’ the opposition to gain credibility.
Indeed regulators over the years were very specific regarding advertising standards that firms adopt and that they should not employ ‘knocking copy” and I would expect that the FCA is no different.
At Panacea, we are very keen on following those social media engaged firms who go about promoting their businesses via tweets. These can and often do provide us with access to some highly creative promotional ideas to share and help others that many of the ‘twitter-sceptical’ would be well advised to study too.
In doing so last week I noticed a tweet from a firm that was, shall we say, a little strange.
The tweet said, “would you be surprised to find that your financial adviser has stopped trading?
Curiosity got the better of me as at first I thought this was a ‘tweet’ from a CMC looking to drum up trade, so I followed the link in the tweet to the site of the firm in question. http://buff.ly/16Q1WOz
From there, and you can look for yourselves, there were many statements that did not paint a very pretty picture regarding the supposed ethics and practices of many financial advisers in business today. And for prospective clients and consumers it would sound alarm bells I am sure.
Now I know advisers can be very contrary and often scathing about the advice other firms give, especially when they may have no knowledge of what led to a particular advice situation (a little like the joke about a tourist in Ireland who asks one of the locals for directions to Dublin. The Irishman replies: ‘Well sir, if I were you, I wouldn’t start from here’) but what unfolded should cause some consternation to ALL financial advisers.
The firm in question makes a number quite sweeping if not highly controversial statements on their website that will be bound to raise a few hackles, these include:
- the drop in financial adviser numbers should be a good thing
- the remaining ones are of a better quality, and have higher standards
- check if your financial adviser is still trading
- we think that many financial advisers will struggle to adjust their businesses to the realities of running a professional fee-based practice.
- with this in mind, they may see cash flow suffer and we could see a further reduction in numbers in due course.
Wow, strong stuff!
The firm in question also makes this “why we are different” observation: “We tell you the truth about your money whereas we believe that the majority of Financial Advisers don’t. It’s not that they lie; they simply don’t tell the whole truth because they have to look after their interests as well as yours”.
The FCA is, understandably concerned about the internet (mainly because it cannot regulate or control it other than by threat) and issues guidance on advertising in general and in particular what firms should avoid.
The FCA understandingly states that in a financial promotion “there is an element of persuasion. An inducement is intended to lead, ultimately, to an agreement to engage in investment activity”.
They go on to say in regard to communications that “They must be fair, clear and not misleading”and very specifically they state that a key element of any marketing activity is “Balance, as a key objective of marketing is to attract as many potential customers as possible, we often see marketing promoting a product in an unbalanced way, which is ultimately unfair for the consumer”.
You can decide where statements like those above sit!
The industry has taken quite a beating of late with fines, naming and shaming, death by dikat and more. The adviser side of the industry does not need to bayonet the wounded on top. I think that firms who are using negative marketing copy such as we found, would be well advised to consider FCA guidance on the subject, but more importantly consider the negative image they may impart of the industry and their peers in their eagerness to positively portray their own business by way of ethical and commercial assumptions that may not accurately reflect reality.