Two thirds of financial advisers fail standards test

m_c_s

Nothing against them myself but thought it was an interesting read

http://money.guardian.co.uk/businessnews/article/0,,2178349,00.html

dunstonh

This is a repeat of news earlier in the year. The research was highlighted as being flawed.

Fourteen of all advisers failed to carry out an adequate 'fact find' on their client, such as ascertain their financial circumstances and needs, before recommending products to the expected standard, while more than a quarter of those tested failed to establish attitude to risk correctly.

There is no standard factfind. Some are 5 sides of A4, some are 40. An increasing number are more focused on the area you wish to discuss and not elsewhere (in preparation for MIFID rules that come in Nov this year). The tied agents, in particular, can only use what their employer gives them. A unqualified mystery shopper isnt able to judge what is or isnt required.

Neil Fowler, the Editor of Which? magazine, said that with such a 'shocking number' of advisers failing the test, consumers needed to exercise caution.

What test? and what shocking number? They only went to 40 advisers. Most at banks. A mystery shopper opinion of a 2-3 appointment process but only completing the first appointment is hardly a test.

The review fails to take into account that you dont waste time going into full detail on a first appointment. You get enough time wasters that you use the first appointment to suss out what they want, if you can help and then go through some concepts and ideas and basic information gathering. If both parties like how its going, you take it onto another appointment to put meat on the bone. If you are getting no signs of any commitment, you dont give much info away and look to call it a day and move on.

Tied agents pretending to be IFAs is nothing new. Thats a well known issue. Also, their risk profiling isnt going to be as strong as tied agents have restrictions on portfolio planning that IFAs do not. So you will tend to find a more basic approach taken. Whilst not desirable it doesnt make it wrong as they are acting within their process which has been signed off on by the FSA.

I could rip a tied agent to shreds if I wanted to but it doesnt mean they were uncompliant or failing standards. I'm all for improving standards but unless you complete the whole process, you cannot pass adequate judgement on a process.

purch

Which? magazine

Apparantly they are 'experts' on just about every subject !!!!

cheerfulcat

It's a re-hash, with added journalistic spin, of the Which? press release. Very lazy IMO.

Flynn_2

purch wrote: »

Apparantly they are 'experts' on just about every subject !!!!

Far from perfect of course but they are a registered charity with the legal requirement in their mem and arts to provide "impartial and scientific analysis". They also happen to be run by a fairly heavyweight board of trustees that includes at least three professors.

Impartial and unbiased advice is hard to come by especially from any commercial organisation.

Compare Which?/The Consumers' Association with a site like Unbiased.co.uk which is run by IFA Promotion Ltd and doesn't sound quite as unbiased as they pretend. The same outfit also run the Impartial.co.uk site from their 2nd floor office in Farringdon Road.

Like much of the industry, they tend to use the terms "unbiased" "impartial" and "independent" outside of the normal meanings of the words.




.

dunstonh

Compare Which?/The Consumers' Association with a site like Unbiased.co.uk which is run by IFA Promotion Ltd and doesn't sound quite as unbiased as they pretend. The same outfit also run the Impartial.co.uk site from their 2nd floor office in Farringdon Road.

IFA Promotions is as the name sounds. To promote the services of an IFA over the alternative distribution channels. They dont sell consumers products and dont give advice. Their name is their aim and you cannot mistake that.

Flynn_2

Agreed D. The point I was making, perhaps not well, is that Unbiased.co.uk and Impartial.co.uk are run by IFA Promotion Ltd whose purpose is, as you say, to promote IFAs. That may not be immediately apparent by calling themselves Unbiased.

They are not an independent charity as is Which?/The Consumer Association and legally required by the terms of their mem and arts to be impartial.

The reported comment at end of the Guardian article by Unbiased.co.uk (IFA Promotion Ltd ) that 86% are satisfied with their IFA should therefore be viewed in that light.

Even by their figures they accept that 14% were dissatisfied which as a figure from someone whose purpose is to promote IFAs seems fairly high. Would be interesting to to know the reason for the disatisfaction.

Old_Slaphead

In the age of spin even this comment is subject to misinterpretation

According to a separate report from Unbiased.co.uk, almost nine out of ten (86%) of consumers who used the 'Find an IFA' service on the website in the last year, were satisfied with the service.

I read it as that 86% of consumers were happy with the 'Find an IFA' service rather than it being a commentary of the services of the IFA

dunstonh

Would be interesting to to know the reason for the disatisfaction.

The filter on the website for qualifications is rubbish. Use it and you often end up with nearest adviser 100 miles away. The site is a bit clunky as well.

Some people are also never happy and seeing as over 2/3rds of people seeing a tied agent or a mortgage adviser think they are seeing an IFA, there is bound to be a bit of overspill from there.

Also, I think sometimes people dont like what they hear or dont understand what an adviser is meant to do. I had one recently that wanted me to visit them at night to talk about savings accounts. I told them I would charge for that and they turned quite rude. That came from the unbiased website. As if I am going to go out at night to someone 15 miles away to talk about savings accounts for nothing. Perhaps I am guilty for a bit of that 14%

baby_boomer

Flynn wrote: »

They are not an independent charity as is Which?/The Consumer Association

Which? has an institutional agenda like any other organisation. One of their aims is self-promotion so that they can get their salaries paid.

dunstonh

The other thing is that Which? have the assumption that clearing debts should have been recommended and are measuring that as the response they should have had. Yet that is a flawed assumption. Whilst short term debts with higher interest rates should be cleared, things like mortgages where the rates are typically 5-7% can easily be beaten with investments over the long term. So, if your risk profile is right, there is no reason to pay off the mortgage. Plus, if you plough all your money into the mortgage, you leave yourself no funds to draw on in an emergency. Additionally, ISAs are a use it or lose it allowance so the short term gain that may occur by clearing a bit off the mortgage may be outweighed by the long term gain of having your savings and investments in ISAs.