Your clients, the FCA, your insurers.
There’s a list of people who want to know whether you’re one of the ‘good’ ones or not, so how do you demonstrate that?
I was chatting with a financial planner recently who’d been working hard on his Consumer Duty obligations and he’d identified that, in reality, the biggest danger to his clients, was him. He was the one giving advice, he was the one they trusted, he was the one with the knowledge and information. He was the person with the potential conflict of interest around advising his client to invest in shares rather than cash; or even to not advise his client that they could, and should, be spending their money, to avoid losing any part of his fee. It’s easy to justify these steps when you know more than your client.
We might like to think we’ve moved on from this, but recent examples bear this out: Darren Reynolds, the adviser behind Active Wealth (UK) Ltd, who advised over 200 clients to transfer their pensions, many of those from final salary schemes into high risk, illiquid and unregulated investments. Or Alistair Greig who, through his financial advice firm, ran a Ponzi scheme defrauding clients in Aberdeen, Aberdeenshire and Lincolnshire out of £13m.
After the event, both individuals have been sanctioned, but how were their clients to know they weren’t to be trusted? And incidentally, because of the nature of the events that unfolded in both examples, their clients weren’t able to claim on insurance policies, and many millions were paid out by the Financial Services Compensation Scheme.
This is a problem from both an individual client and a broader financial sector perspective.
So how do you demonstrate you’re to be trusted to the world at large? Reynolds held Chartered status and Greig’s firm was an appointed representative of a well-known network. The average person on the street looking to find an adviser might rely on these as an indication that theirs is one of the ‘good’ ones. Countless times my steelworker clients said to me “I found my adviser on Unbiased and I thought that meant they would treat me well”. Or even “I checked my adviser was on the FCA website so how could they have treated me this way?”
Fighting from a different direction
I guess if you really want to do something bad, then it is pretty hard to stop you; a deliberate fraudster will go to vast lengths to hide their wrongdoing. But we can do better than shrugging our shoulders and leaving it up to the client to find out.
For 20 years I’ve fought the side of the client against the bad guys, and I’m tired of that. I want to fight it from a different direction. I want to help the financial advisers and planners who have integrity and pride in their firms and the advice they give.
I’ve taken the decision to leave Clarke Willmott and to focus instead on the RQ Certification. RQ Certified is an annual due diligence process that looks at the breadth and depth of a financial planning firm to assess the all-round robustness of client care and service, as well as the structural soundness of the firm itself.
The RQ Certification is a quality mark for client care, compliance and practice management. It will be awarded to those firms who demonstrate the highest standard of client care, technical expertise, risk management and governance. We’ll work with firms to help them to achieve and maintain the RQ Certification standard. We’ll also work with lawyers and accountants to inform them about this accreditation so they won’t hesitate to refer clients to financial advice firms who have achieved the standard, safe in the knowledge that it will satisfy their due diligence requirements.
You’ll also be able to use RQ’s collaboration platform to strengthen your professional network and generate more referrals from accountants, solicitors, other financial advisers/planners, mortgage brokers, and more.
RQ Certification demonstrates to your clients, your insurer and the FCA that you’re one of the best professional firms to work with.
How will you demonstrate your ‘goodness’? You can add your name to the waiting list here.