Who Takes Care Of Clients’ Interests?

Who Takes Care Of Clients’ Interests?

The saddest lament in the Bible is “no one cares for me”.

In this “dog-eat-dog world” and “rat race”, one can ask “who will take care of our interests?”

Even in business, when we pay for goods or services, we have a right to ask whose interests are the vendor or salesperson serving – the clients or their own?

In Philippians 2:20-21, we read of Paul complimenting Timothy and commanding him to the Christians of the church in Philippi for being one “who takes a genuine interest in your welfare. For everyone looks out for his own interests…”

In the financial services industry, the existence of regulations and the threat of disciplinary action from the regulators are important but anecdotal evidence is aplenty that it is still misselling and other malpractices like churning and use of unlicensed subagents in some cases.

There are big differences in the sales process and the basis for recommending products differs from firm to firm. The level of training and knowledge of the advisers also differs. The moral and ethical standards of advisers obviously depend on their advisers’ religious and moral codes and upbringing.

Although the Financial Services industry is considered regulated in some ways, there are obvious differences in practice standards and often it is a case of what minimum standards to maintain rather than maximum standards to strive for which translates to higher cost and greater sacrifice of time on our education and clients’ education.

The point is that best practices are only appreciated by people who are in the know and not many clients are in this category. So product pushing, pressure selling by emphasizing only the good and not the downside and the use of gifts and prizes to attract those shoppers who are looking for good bargains rule the day.

What can be done and who is to do it?

The regulators can only do so much. The practitioners ought to do much more to raise standards of professionalism and client interest. But the most important person to bring about changes is the CLIENT.

Clients are the only ones who can make the practitioners shape up – both companies and advisers. What should clients look for and insist on?

1. Appoint an adviser who looks after your interest and not one who represents the interest of the financial institution. Do you know that only licensed independent financial advisers legally represent your interest in the full sense of the word? Unlicensed Financial Advisers do represent clients’ interests to a certain degree but are not required to give the fair and objective advice that IFAs are mandated to give.
2. Get the adviser to reveal his credentials and experience and capabilities. Demand full disclosure of:

(i)    Which product providers he can distribute for

(ii)   The product details, especially the risks and not just the benefits

(iii)  The type of service you will be getting, especially if the adviser charges a service fee or wrap fee. Ask also about the continuity of the service and whether the same person can be expected to be your adviser

(iv)  The comparison of the product being offered with what is offered by competitors. Also, what other alternatives are there. Instead of focusing on what is being offered, focus on what the market offers

(v)   Always take your time to consider and deliberate on your decision. Salespeople are notorious in wanting to make you make quick decisions by dangling offers and gifts which only apply for the day in question. Shun these sales tactics

• • • • Take your time
      • Ask for a second opinion
      • Most advice is free

The thing to remember is that faced with the reality that everyone can be expected to look out for his own interests, and only deal with a person you can trust with your money.

What evidence is there that you can place your trust in the adviser and his advice?