Panacea comment for Financial Advisers and Paraplanners
29 Oct 2018
FCA suggests clear out of sales dinosaurs
Arthur’s thought for the day: “You make contact with your customer. Understand their needs. And then flog them something they could well do without.”
I think this may be what one senior figure at the FCA’s perception of financial services sales ‘persons’ is?
David Blunt, head of conduct specialists at the Financial Conduct Authority, speaking at a recent City & Financial conference explained:“Where we want to get to is for firms to have a real sense of personal responsibility for all they do in financial services.
He then went on to say, “Are sales people who have risen to the top the right people to be leading today”?
As a retired IFA and the founder of IFA community Panacea Adviser, I find his thought process deeply offensive. Is he suggesting that sales people are a sub class. Sounds a bit like the ‘Brexit remainer’ argument about leavers- that they were too stupid, too ignorant, racists, xenophobes……you get the drift.
His Linkedin profile shows him starting his career working for City solicitors Hogan Lovells going on the well-trodden path of articles through to a fully qualified solicitor.
I suspect that David Blunt has little knowledge beyond the walls of regulation and academia. After leaving Hogan Lovells in October 1998, his entire career has been spent in regulation of some sort. Firstly, with a couple of years at the Stock Exchange then from 2000 it has been climbing ever upwards at the FSA and then the FCA.
It was said that intelligence does not fit easily with common sense. The curse of the regulator.
We all agree that happy customers (positive outcomes is the phrase to use in 2018) are the key to any successful business.
But with a working life spent entirely in the world of regulation, I am deeply offended as is the fashion today, on the part of others too, that he should ask the question “ Are sales people who have risen to the top the right people to be leading today”?
If his Linkedin profile is a yardstick, this is an individual who has no experience of what it takes to raise the money to start a business, especially a regulated business, grow a business, deal with all the troubles that can go with it or has any idea whatsoever about running a business. And amongst the hardest these days is a financial services business.
Sales are bad, sales-people are bad, regulators are good is the message spouting forth? Really?
Any business is built on the fact that it has something that somebody is prepared to pay for. Tangible, or in the world of financial services, intangible.
Any business requires somebody to sell the services, goods, or in the financial services world someone to ‘sell’ the ‘advice proposition’.
Nobody ever bought a financial services product. Historically they were ‘sold’ it, often by direct sales.
That is bad in 2018, it is now by advice.
Bad like the new ’snowflake’ thinking about Churchill, Cecil Rhodes, Bomber Harris or even this month ‘Prince Charming’. All have done bad things it seems. Disney’s ‘Prince Charming’ is probably top of the pile for kissing Snow White without permission.
Back in the day, the reward for the ‘sale’ was described as a commission, successful sales people made a lot of it, the unsuccessful ones fell by the wayside.
By the way, people saved then, paid into pensions, had life cover and did not see advice as something to pay for as it was already included within the sales process- excuse the simplicity, but life was simpler then.
Today, success in sales is not measured in terms of commission, it is now called something else. It is a metric referred to as fee income- based upon advice from a professional. That person being highly qualified with a ‘proposition’ to offer but, with a product invariably attached. As an aside that will doubtless bring scorn waves raining down, in most cases the fee for the ‘propositions advice proposal’ is closely resembling what was previously known as commission.
A successful advisor is measured in fee income. But really it is still ‘sales’. After all, if an advisor can find no paying clients to give advice to, they fall into the same category as those back in the day, a failure.
Mr Blunt should note that in financial services provider firms there are huge numbers of people who rely on advisors promoting their advice solutions for their livelihoods.
He should also note that most financial advisors are small business owners, if they are sole traders or in partnership, they carry responsibility to the grave at the moment for their actions.
I think that is what is called ‘personal responsibility’.
In any business, the sales people are the driving force yet for some reason, sales in financial services is a dirty word. Even Hogan Lovells require business getters, people who can get new clients that they can charge fees to.
There are some fantastic people in this industry, many have come from a sales background. I am not sure how many regulatory staff have made the transition to sales in a commercial environment.
Oh, there is one, Rory Percival.
David Blunt “must be on them stair rods” (as Arthur would say), he should be careful what he wishes for.
There may be some out there like me, looking back over the failings of the various regulators we have had- NASDM, FIMBRA, PIA, FSA, FCA, asking Mr Blunt what consumer detriment his actions and those whose actions he manages could be accused of causing. After all, with some 19 years of his working life being spent in Canary Wharf (plus the last couple of weeks in Stratford) and looking with the #metoo generation mindset, there must be something?
But silly me, as ‘Sir Hector’ once said, if you want a regulator to take responsibility for what they do, nobody would want to do the job.
Those in regulation are the one’s who have failed the consumer. They are always right after the event, never show foresight or a willingness to apply forward thinking to regulation.
They kill businesses with that lack of foresight burnished with cost.
It is the consumer who suffers by way of firms passing on those increased costs and charges incurred paying to keep them safe from the detriment the regulator ‘coulda/ shoulda’ spotted years ago.
The question I would ask is “Are people who have risen to the top of the regulatory world with no real-world commercial experience or business success, the right people to be leading regulators today”?