The Good, The Bad and The Ugly

Most of you will be familiar with Transact, our principal platform provider and understand their role in your investment planning and how they have helped shape the future of today’s financial planning world.  One of the leading lights at Transact, Malcolm Murray, has recently announced his retirement and, in doing so, left us with these thoughts which we at Manse strongly echo and can summarise as follows.

The recently published report from the Parliamentary Commission on Banking Standards shows the effects of the banking crisis are far from forgotten or forgiven. Among the members of the Commission were Andrew Tyrie, chairman of the Treasury Select Committee and his predecessor, John (now Lord) McFall. Both men have been deeply involved in the issues arising from the activities of the banks in recent years.  Lord McFall summarises appropriately as follows:

“All the scandals of banking – and there seems to be a fresh one with every new page that is turned – can be reduced to one, namely that of the client coming last. The day when a Chair or Chief Executive of a Bank receives a “Thanks, I trust you” letter from a customer will be the day when the industry has turned the corner”.

One of the root causes of the crisis was a disregard for the customer. In an ever increasing push for profit some of the leaders of banks fostered a culture where some of the products sold were often not in the clients’ best interests. No doubt they would claim that their actions were justified at the time and made commercial sense in a highly competitive world. The lesson that has hopefully been learned is that when integrity is lacking and short term gain is the driver then sooner or later there is a price to pay. In financial services that price is a loss of trust and the damage, both financial and reputational, is immense.

Unfortunately, in our business none of us are immune from the fall out. Financial Planners are protected to some degree in that their existing clients will have benefited from what has generally been recognised as a personal and valuable service. Never has it been truer that clients will speak highly of their own adviser whilst at the same time prepared to cast doubt upon the value of the profession as a whole. We need to recognise that we all have to work hard to convince the general public that we can be trusted, that we put their needs first and that our own integrity is not in question.

In recent years many advisers have restructured their businesses to provide a lifelong financial plan for individuals and their families. Good advisers have always developed a strong personal relationship with their clients and this service can only work effectively when there is complete trust. The most successful individuals or companies, whether advisers or those who offer support services, have always been those who built their businesses on the twin pillars of integrity and trust. Others may have enjoyed some short term success but eventually most will have learned there is a price to pay for the absence of these two qualities.