Industry and profession; two small words, often used lazily and interchangeably.
Indeed, if I looked back over these blogs I’m sure I’ve been guilty of doing the same.
The words we use matter though; they reflect how we perceive ourselves and more importantly, how consumers see us, the services we provide and the value we offer.
In many ways it all comes down to one word: trust.
Our recent YouGov survey (you can read about it by clicking here) clearly showed that a lack of trust was one of the key reasons people over the age of 55 don’t take financial advice. When we see daily the benefit clients get from working with us and we know 90% of consumers (Source: Royal London) are satisfied with the advice they receive, that’s hugely frustrating.
Making the change
If we don’t perceive ourselves as a profession, what chance do we have in convincing others? I believe the first step therefore is simple, yet crucial: stop using the word ‘industry’ and substitute it for ‘profession’.
It’s a small change, and one which some will rightly criticise as window-dressing if it isn’t backed up by action. As Gandhi said: “You must be the change you want to see in the world.” However, I’d argue that the journey from industry to profession has already started. RDR certainly helped and for many was the kick-start they needed, but for fundamental change to really take hold it can’t be driven by regulators; individual advisers and planners need to be the catalyst, lifting their own standards and those of people around them.
So, how can we build on the good work that’s already been done and speed up the pace of change?
1. Root out poor practice
“The only thing necessary for the triumph of evil is for good men to do nothing.”
Where we find miss-selling, poor practice and bad advice it must be reported appropriately. We can’t turn a blind eye. The regulator then needs to thoroughly investigate the allegations and when appropriate impose sanctions.
The case of British Steel was a great example of this model in action; financial advisers and planners uncovered poor practice, alerted the FCA, who acted quickly and decisively. Hopefully, others who might be tempted to take advantage of consumers in the future will been deterred by what they’ve witnessed in South Wales and elsewhere.
2. Demonstrate the value of advice
Nothing damages the reputation of our profession more than miss-selling, poor practice and bad advice. The personal finance press is quick to cover such stories, and are right to do so, but it does anger me that the coverage isn’t more balanced.
To change that and improve the balance, we must get better at understanding, and then communicating, the value of advice and the positive impact we have on our clients’ lives.
While this impact can be demonstrated in financial terms through the mounting evidence that taking financial advice makes people better off, it isn’t all about the money. We know our work has a human benefit too, perhaps helping a client retire early, giving people the confidence to make a fundamental change to their life, or providing reassurance after the death of a spouse. We know there are huge intangible benefits to financial advice and planning, we just need to talk about them more. Our role as educators is often missed and undervalued. We all know the difference it makes to a client when they ‘get it’ and then start to feel comfortable about their future – how can you put a price on that?
3. Improve standards
The drive to raise standards isn’t exclusively about improving our technical knowledge and qualifications, but it certainly has a key part to play.
RDR meant that many advisers and planners needed to become more qualified. That regulatory nudge (for some it might have felt more like a shove!) has been embraced by many advisers and planners, with ever greater numbers going on to achieve higher levels of qualifications and accreditations.
I believe that applied correctly this increased knowledge will benefit consumers, but do they feel the same? Do consumers know how to select a financial professional? Do they understand the difference between an adviser who has the minimum level of qualifications required and a Chartered Financial Planner?
I’d suggest they don’t.
We need to get better at explaining our qualifications, the effort which goes in to achieving these higher standards and, crucially, how they benefit our clients.
Some will scoff, pointing out that most accountants and solicitors wouldn’t dream of explaining their qualifications to a prospective client. That might be so, but it doesn’t mean we shouldn’t. After all, we are starting at a much lower base, continually blighted by stories of miss-selling and poor advice, if we don’t fight back and demonstrate our professionalism, who else will do it for us?
The trust dividend
The benefits of moving successfully from an industry to a profession are huge. Our individual businesses will flourish, so will the wider profession and we’ll finally be perceived on a par with other professionals. Equally importantly though, it will improve trust and confidence in our profession, leading to more people taking financial advice, helping them to lead better and more fulfilling lives.
Now, who’s with me?