If you want your financial advice to be perceived as ‘low-rent’ then just keep asking your clients stupid questions. David Roberts explains more.

    Much has been written by industry commentators and the regulator about the limitations of attitude-to-risk profiling as well as over-reliance by advisers on ATR tools. But let’s consider ATR questionnaires from a different angle, that of the client.

    Asking someone how average they are is crass, stupid and above all unprofessional.

    My professional view is focused on raising customer service levels, satisfying regulatory requirements for suitability and record keeping, easing the burden of compliance and finally, presenting data in formats that support informed business decisions by Harbour’s users. On a personal basis, I prefer to use the services of a professional to assist me in my investment and pensions decisions and one useful impact is that I am very alive to the customer perceptions created by using ATR questionnaires.

    Put yourself in the shoes of an investment client. He or she comes to you for advice because they have investment decisions to make. Perhaps they’re in their 40s or 50s, climbed the greasy corporate pole to pursue their career or perhaps run their own business.

    You tell them about your approach to investment advice, why you’re better, different, more qualified, and of course you passionately believe this. Then you give them a risk profiling questionnaire. Bad move!

    Let’s take one commonly used approach used in psychometric questionnaires is to invite the client to make a comparison with an average person. Really? What is an average person? By what and by whose definition? Why does anyone think that relevant? What’s average to me is probably not average to you. There are many other examples of similarly bizarre questions and I could go on but I shan’t.

    The adviser sees the questionnaire as a necessary piece of admin but what’s the client perception? The commonly held view amongst those subjected to ATR questionnaires is: ‘what the hell has this to do with me and why am I subjected to what is so obviously a backside-covering exercise?’

    If you are going to put a questionnaire in front of a client, at least do them the courtesy of asking informed and relevant questions and provide meaningful responses that they can select appropriately. Asking someone how average they are is crass, stupid and above all unprofessional.

    A commonly held misconception is that the FCA requires the use of risk profiling tools. They don’t. The regulator requires advisers to establish a client’s investment suitability; establishing the level of risk an investor is prepared to accept is only one small part of suitability. Unsure? Then read the Business Standards in COBS9 – it’s not that long, nor is it particularly soporific! What the regulator demands is that an adviser establishes the client’s suitability for particular investments and maintains proper documents that record the determining factors.

    So if you regard yourself and your firm as a source of professional financial advice, then do yourself a favour: don’t give a piece of box-ticking, arse-covering admin for your client to complete unless you want to create the impression that you’re just another journeyman plying their trade. If you want your financial advice to be perceived as ‘low-rent’ then just keep asking your clients stupid questions.

    Start the discussion

    Add a comment