The sidelining of the client 

Unusually for the head of an FCA-regulated Network, I still look after my own clients.  I have a steady flow of newbies referred to me, most of whom I would categorise as 'victims' of the financial services industry.  They generally come because they've had rotten experiences elsewhere, and are conscious that they need some help.

Now, please don't misunderstand me.  They have not suffered the predations of some unregulated bucket-shop somewhere, and generally speaking they have not fallen foul of some kind of injurious and ill-conceived investment scheme that was designed to leave most of their investment growth in the pockets of the plan manager.  The kind of victimisation one witnesses operates in the background, almost undetectably, and you don't realise at first how damaging it is, because it occurs insidiously over many years. 

A new one arrived in my office today.  The husband of a friend of my wife, he produced the ubiquitous battered cardboard wallet containing statements from a range of pension-providers who don't really exist.

Oops, perhaps another note of clarification is required.  As I shuffle through the papers, I encounter some benefits that used to reside in a Pearl DB scheme, that were transferred into a Sun Life T Plan (old S.32).  Sun Life were then swallowed up by Axa, who after a few years got bored with the whole thing and sold this client, along with many others, to Friends Life.  Throughout this series of client-independent transactions, nobody has looked at the range of singularly inappropriate investment funds that were utilised donkey's years ago, and as the client hits 63, and as Friends Life hands the baton over to Aviva, I can't honestly say that I am optimistic that anything is likely to improve.

Sitting underneath the composting pile of Friends Life papers, there's a whole repeat of the same story but based upon an old Prolific pension plan which has migrated, via a series of strange, apparently unguided mutations, into a Phoenix Life plan.  These companies specialise in churning out reams of unspecific, generic information, most of which conveys little of significance to any rational person, and is largely devoid of the kind of content which people might actually base decisions upon.  It is no surprise that consumers feel powerless, and are unengaged with their financial provisions, given this kind of studied disinterest in effective service.  This kind of paperwork is simply a pretence, in order to disguise the complete absence of any real benefit to the investor.

Who knows what might have been the result if there had been some continuity?  What if Prolific had continued as a viable investment-provider (my memory is not yet so dim that I cannot remember some pretty decent UK Equity Income funds), and remained committed to their own investment solutions?  Come to think of it, almost anything would have been preferable to what actually happened - this trend towards consolidating into third-rate, disinterested, plain vanilla investment pots, whilst still retaining all of the old charges has been an egregious outcome.  It is strange that all of this has happened during a period of hyper-regulation under the PIA, FSA and now FCA - but the poor consumer's interests have languished out of sight whilst the bureaucrats have pursued their own pet projects.

And, of course, there are quite profound implications for the Adviser who takes a pride in his or her role, and whose desire is to bring their clients back into the game, off the bench, and to engage with their own financial-provisions.  Looking at these legacy contracts, the overwhelming impression is of poor value, lack of care, and sheer inappropriateness - and yet, the poor client has contributed their own hard-earned cash into these vehicles.  There is value here which needs to be preserved as far as possible, and the professional adviser will want to take great care when designing the best strategy.

There are no magic-bullet answers here, other than for us to bring our clients' best interests clearly into central focus.  Let's get them back in the game!
 

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Kevin Moss, 20/02/2015