Written by Chris McCullam on Wednesday 3 April 2013
A question often posed at dinner parties and functions when you meet someone for the first time is ‘what do you do?’ If I say I’m a consultant (and we’ve clarified it isn’t the medical variety) there is often a comment along the lines of ‘can I borrow your watch?’ – at which everyone chuckles.
At a recent speech to the CISI, Martin Wheatley was talking a great deal about customer service; putting the interests of the consumer at the forefront of financial services. One of the areas he touched upon was another consultative part of the industry; wealth management. He drew on cases from a thematic review the FSA had carried out which found big gaps in the suitability of investment strategies to the end investor:
“…there are managers and firms in the industry placing money into portfolios that simply don’t match the appetite for risk of their investors.
I’ve heard of elderly widowers with zero knowledge of investments, and no other assets to their names, being placed in risky investment portfolios despite specifically requesting low risk.
I’ve heard of clients being urged to transfer self-invested pensions into discretionary investment portfolios so they can, apparently, manage their risk better. Only for FSA investigators to be greeted with blank expressions when they ask why the risk profile has leapt so high.”
For us consultants, be that business or wealth based, we do need to borrow your watch; figuratively speaking. I can tell you the time, but you need to know the time where you are, what the time is for you rather than, as the song says, “it’s 5 o’clock somewhere”. To stretch the analogy even further I would say I’d borrow your watch but return it with a clearer view of hours, minutes and seconds; maybe even showing the date and whether it is am or pm.
KYC and Fact Find are an essential part of this; knowing your customer isn’t about working out what their budget is or what services you think they’ll pay for – it is about making sure that the work you do for them is the work that they need, it’s about checking the time with them. For wealth managers it seems fundamental that you need to borrow your client’s watch and make sure it is still showing the right time and working properly for them. And you can’t really do this just the once, watches, portfolios and business all need regular maintenance.
To draw on the recent experience of a colleague whose very expensive watch had stopped working, he discovered that the cost of having it serviced was disproportionately expensive compared to purchasing what many would consider a still very good watch. However, his watch had been a wedding gift and hadn’t been serviced in the 8 years he’d owned it. I’m sure many wealth managers would agree that there’s no point putting a lot of money into something and then not making sure it is still working properly on a regular basis.
After all, times change.