Brad Fox – CEO – AFA

The Association of Financial Advisers (AFA) has been working with key advice profession stakeholders to achieve a more workable approach to the new Future of Financial Advice (FoFA) Code of Conduct requirement. 

AFA CEO Brad Fox said the AFA is looking for a practical approach to the issue that addresses the deep complexity and extended timeframe.  “The first opt-in obligation does not kick in until July 2015, so the industry has the time to get this right,” he said. 

Mr Fox said the AFA recognizes the central role that codes of conduct play in guiding the financial advice market in the direction of increased professionalism.  “Codes of conduct set expectations for behaviour and are critical in ensuring client outcomes,” he said.  “However, the opt-in exemption, which is about getting an exemption from the law, means they are morphing into something else.”

This marks a different approach to client engagement, Mr Fox said.  “There are significant implications that flow from this approach and the industry needs to take the time to get it right.”

Mr Fox said the AFA holds the view that Australia’s stringent financial planning laws, together with practical professional body codes of conduct, will ensure an appropriate behavioural framework for advisers, however codes were never designed to be the law. “We believe codes should be about driving adviser behaviour; behaviour that builds consumer trust,” he said. “Designing a code to circumvent elements of the law is at odds with the intended purpose of professional codes – which are typically about how to apply the law to give the right client outcomes.”

Mr Fox said the AFA will be leading the profession to adopt best practice behaviours. “Our position on codes and in particular professionalism is that it is achieved through education, compliance to the law and most importantly, the behaviour of advisers,” he said. “Compliance to the law is the minimum standard, and it is a high standard following the FoFA changes. We do also encourage our members towards continual improvement and further personal professional development.  It’s the carrot rather than the stick approach.”

The AFA met with licensees and ASIC Commissioner Peter Kell at the AFA Licensee Leadership Forum late last month to discuss codes of conduct. “The AFA is acutely aware of the pressure advisers and licensees are feeling around implementing FoFA related changes,” Mr Fox said. “We are therefore very carefully considering the views of advisers and licensees in deciding whether the AFA should have a comprehensive code, that is ASIC approved, or whether it makes far more practical sense to have a two-part code with only the part relevant to obviating the need for opt-in approved by ASIC.”

Mr Fox said many advisers are probably not aware that if they elect to obviate the need for opt-in by belonging to an ASIC approved code that meets the requirements of RG 183, the measures may apply to each and every client of the practice, not just those who become clients after 1 July 2013.  “I think advisers need to know that so they can make informed choices,” he said.

A two-part code would mean AFA members are all subject to the core principles-based Part One code guiding professional behaviours. Members could then elect to belong to Part Two which would allow them to obviate the need for opt-in by applying additional service requirements across clients. “This appears to be a practical way of helping our members choose a code that suits their preferred business model and which is also compliant,” Mr Fox said, “However the option of a two part code will be subject to further discussions with, and consideration by, ASIC.  It’s an alternative worthy of consideration by advisers, licensees, and the regulator.”

Following the most rigorous debate and legislative changes affecting financial advice in 20 years, Mr Fox said he is confident that an adviser meeting the new requirements of the law will be doing a great job for their clients.  “As in all professions, there will be people who want to stand out from the crowd through exemplary behaviours, who go well above the minimum legal requirements. The AFA already has thousands of advisers like this,” he said. “Codes of conduct should inspire and honour that kind of behavior – they should not be instruments of law enforcement.”

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The advertising, which started in September last year and accelerated in the past four months, has exceeded its target of increasing consumer awareness of FPA members by 20 per cent, achieving a 24 per cent increase in tracking research.  This result is up from the 14 per cent increase measured in November last year.  

The research, conducted by Australia Online Research and canvassing 505 consumers aged 35 – 64 during September, confirms the campaign’s aim to promote the benefits of receiving trusted financial advice to Australians is achieving cut-through.    

This year’s campaign featured the additional promotion of CFP® professionals, and results showed that consumer awareness of CFP® professionals also increased by up to 24 per cent and the perception of CFP® professionals as the highest qualified financial planners increased by up to 17 per cent. 

Other highlights of the campaign include:

• FPA TV advertising has reached over 860,000 people and print advertising has reached nearly 450,000 people over 3 times each.
• Online advertising on 15 finance websites reached nearly six million people who saw ads around 4 times each.
  The click-through rate of FPA online ads is three times higher than the industry average.
• 2012 online advertising has driven more than 50,000 click-throughs to the FPA website and over 20,000 Find-a-Planner searches.
• Core messages from the advertising were accurately recalled by up to 85 per cent of our audience (‘FPA members work to higher standards’ and ‘Not all financial planners are the same’).
• The more often the ads were seen, the more FPA members were perceived as qualified, professional, trustworthy, educated, ethical and responsible.
• Positive impressions of the financial planning profession increased by 31 per cent.

According to the FPA’s Chief Marketing Officer, Lindy Jones, these results are positive affirmation of the campaign’s success. 

“The FPA‘s mission to raise the community standing of its members is an ambitious and mission-critical one.  The new advertising for both FPA members and CFP® professionals was developed by 3C Creative Agency and performed extremely well in pre-campaign testing with consumers and was also well-supported by our member Committees. 

“So we were confident that the campaign message would get some traction.  The fact that up to 85 per cent of consumers who saw the advertising recall that FPA members work to higher professional standards is proof,” said Ms Jones.    

Building on last year’s successful start, this extended campaign runs over 12 months on national pay television, online finance websites, in selected magazines as well as more than 25 national, metropolitan and regional newspapers.

It also includes continuing Google paid search and Adwords activity which has driven more than 50,000 click throughs to the FPA website in the past three months and over 20,000 searches on the FPA’s industry-leading Find-a-Planner online directory.

Ms Jones concluded, “This campaign is funded by our members for members.  So it is critical that members perceive value in the consumer advocacy we undertake on their behalf.  While the advertising campaign is one component in achieving this goal, our consumer website and literature, as well as our ‘Ask an Expert’ online consumer forum are all ongoing.”

“As is our effort to restrict the use of the term ‘Financial Planner’ in law.  We’ve been consistently lobbying Government and other stakeholders to ensure this important milestone for all Australians is achieved.”

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It isn’t that they don’t have points of difference, or that they struggle to put ideas into words…generally they are very good at both. Each adviser has a unique way of interacting with customers, and maintains relationships a little differently, and has slightly different views of how and where product solutions fit in, and what the relative strengths and weaknesses of different strategies are.

Despite that, a room full of advisers when working through the process of trying to articulate their value proposition, almost always come up with the same line of thought (and often use the exact same words) to try and describe themselves and their businesses. 

It ends up sounding something like this:

“you should do business with me because I am honest, trustworthy and a nice person. I care about people and am very good at my job. I am clever and have qualifications and you will have peace of mind if you work with me”

This is the very simple summary of the typical statement advisers first come up with – as a customer might hear it.

So what’s wrong with it? Well, pretty much everything….So let’s pull it apart.

1. Honest, trustworthy, etc…these personal attributes are simply expected. There is no value-add here – customers expect this as a minimum standard of integrity.
2. Nice person…of course you are. If you weren’t you would have no customers, in fact, you’d have no business if you had no ability to relate well to others and be a decent human.
3. I care….well, once again, you are expected to aren’t you? If you did not actually care about others you would not be in a profession of trust where an essential component is the ability to think of the other persons objectives and be willing to work with them to get them the results they want.
4. I’m clever & have qualifications, etc….of course you do. Otherwise you shouldn’t be in the business of advising people about money.
5. You will have peace of mind. NOW….the big problem with this is no customer actually believes it, and not very many advisers can actually deliver it.

So let’s recap….5 parts to the typical value proposition statement designed by most advisers and 4 of them are “hygiene factors”, and one is frankly unbelievable in the minds of the customers.  By “hygiene factor” I mean it is a given in the customers mind…as in any hospital will be hygenic.  It is not in itself a point of difference for hospitals.

In a previous post I outlined the formula, or the questions that must be addressed, to come up with a genuine point of difference that really means something to a customer. 

Basically when trying to create an articulate value proposition it falls down in 2 key parts:

The adviser doesn’t think of how different they are to other advisers. They think of how different they are to the customers. So the proposition ends up sounding the same as all other advisers’ value propositions…hardly a unique point of difference…and simply highlights the distance between the customer and the adviser. 

Secondly, the value proposition doesn’t really capture what benefits the adviser actually delivers to the customer.
And that is the core objective of it:  articulate the benefit to the client that cannot be obtained from someone else.

Here are some general areas where you might be exceptional and doing unique things, and are able to do what customers value:

• Customisation:  using the masses of data and information in a highly personalised manner, or perhaps providing service or advice that is tailored to highly specific customers
• Risk Handling:  taking away risks for customers; transferring responsibilities; removing the need to consider specific risks – making their world less risky than it was
• Convenience:  being able to combine things in a way others can’t; getting access to what customers need and value faster, easier, and so on; being there – instead of them having to initiate action, etc

This is just a short collection of concepts to highlight that creating a value proposition is not about you.  It is about the end result for the customer – the thing they value.  When you get that, and are able to express it succinctly, then they will get you and the value you bring. 

All blogs are the personal views and opinions of Tony Vidler, Strictly Business Ltd, only. They should not be attributed or linked to any other organisation or business that Tony or Strictly Business Ltd may work with at any time. For more great ideas on how Strictly Business can help your professional advice business perform better and grow, visit www.financialadvisercoach.com

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And, in a year that sees the award celebrate its 10th anniversary, female advisers are more strongly represented than ever before, making up half of the shortlisted panel of six advisers.
 
AFA CEO Richard Klipin said, “I am delighted that as we celebrate the 10th anniversary of this award, that the future of advice is in great hands. We are seeing innovation flourish and practice leadership grow and these finalists are a credit to this profession and the life changing advice they provide.

“Zurich has been a fantastic collaborative partner on this journey to excellence and I’d like to thank Colin and his team for their commitment, foresight and focus to raising the standards of this award.”

Colin Morgan, Chief Executive of Zurich’s life and investments business, sponsors of the awards since inception in 2003, said, “Against a backdrop of unprecedented industry change emerge the true visionaries, those who embrace change and turn it into opportunity.

“This year’s crop of finalists has seemingly done the impossible, raising the bar even higher than before. We are delighted to see that as we celebrate the 10th year of the award, it continues to go from strength to strength, as does Zurich’s desire to champion adviser excellence.”

The 2012 AFA Adviser of the Year will be announced on Tuesday, 30 October 2012 at the AFA National Conference at the RACV Royal Pines Resort on the Gold Coast. 

The six finalists are:

• Mark Rando, Rando & Associates, Western Australia
• Olivia Maragna, Aspire Retire, Queensland
• Jenny Brown, JBS Financial Strategists, Victoria
• Dennis Jones, Beacon Wealth, Victoria
• Michelle Tate-Lovery, Unified Financial Services, Victoria
• David Clark, Clark Pacific Financial Services, New South Wales

Judging Panel
1. Brad Fox, President, AFA
2. Richard Klipin, CEO, AFA
3. Peter Sobels, Director, Riskinfo
4. Graham Peatey, Managing Director, Encore Group
5. Dr Rebecca Sheils, Leading Practices Program Director, Beddoes Institute
6. Kristine Wade, Head of Sales, Zurich Life and Investments
7. Marc Fabris, National Manager, Sales Strategies and Research

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Platinum’s group of companies has been in operation for almost 12 years, recently adding wealth management to its suite of client services. 

Premium CEO, Paul Harding-Davis, said Premium wasvery pleased to expand its Queensland reach and welcome Platinum to the Premium group. 

“We are actively growing our firm through alliances with firms that want the support of dealer network, but also wish to remainfree of institutional ownership.  Platinum is our second Queensland alliance in as many months, with Meridien Wealth Management joining us in August.  We are very pleased to welcome Platinum to the group and look forward to a long and mutually beneficial relationship, for both our businesses and clients.” 

Platinum Principal, Robert Kirk, said the firm had looked at a number of dealer groups and found that Premium was the best fit for its business and clients.  

“We were looking for a group with similar depth of knowledge and focus on holistic financial management, rather than simply selling life insurance or other products.  As Premium was founded by accountants, we were attracted to the focus on training and qualifications that the group holds.  Additionally, as Premium operates on a fixed rate and is not driven by volume or funds under advice fees, it made a better fit for our business.” 

Mr Harding-Davis said he anticipated that the recently announced accountants licencing program will also lead to additional recruitment in the near future. 

‘We will offer the three tiers of licencing and the support services that go along with it, such as monitoring, audit and training.  Additionally, accountants will need to be RG146 compliant, so we provide access to the necessary training packages, along with a sensible pricing model.  As most of our advisers are part of accounting firms, we also offer significant advantages with our collegiate approach to knowledge sharing. We believe the referral opportunities this will create will also be of significant value for the advisors in our network.”

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Nineteen cyclists –  out of the 40 who have taken part in the $100,000 fundraising marathon – were greeted by David Southwick, member for Caulfield in the Victorian Legislative Assembly; 1960s cycling Olympian Alan Grindal; AMP Financial Planning’s Thomas Reeh, and a crowd of wellwishers.  

The cyclists are financial planners and friends who had pledged to raise $100,000 to help disadvantaged young Australians through Future2, the foundation of the financial advice profession.

• The AMP Future2 Wheel Classic covered 1210 km in nine days, an average of 134.4 km a day. 
• The cyclists were on their bikes for between 4.5 and 6 hours each day.
• On average, they had to fix  8 flat or punctured tyres on the road every day – 14 of these on the road out of Sydney to Bundanoon on Day 1. 
• They spent an average of 3,251 calories each  day and were sustained by – among other energy foods and drinks – 53 kilos of bananas. 
• They climbed and descended an average of 1.25 km each day, the biggest climb being almost 3 km between Jindabyne and Corryong; the total net climb was 3.8 km.  
• In spite of the climbs, the cyclists averaged a speed of 28.7 km/h.  One recorded speed during the descent of the Snowy Mountains, was 80.7 km/h.

The group set off from Sydney’s Circular Quay at 7.30am on 15 September.  Their route took them to Canberra, over the Snowy Mountains, and through country Victoria stopping at Wangaratta, Shepparton, Bendigo and Castlemaine. This is the third annual Future2 cycling fundraiser. 

Future2 Wheel Classic 2012 - riders arrive in Melbourne

The Wheel Classic also has the generous support of Caltex (fuel vouchers), Vital Massage Therapies (massage), Rural Funds Management (dinner in Canberra) and many others.

The fundraising efforts of the cyclists have raised over $89,000 to date.  The ride also has the generous support of AMP Financial Planning (Gold Partner) and Matrix Planning Solutions (Silver Partner).  Magellan Asset Management and Macquarie sponsored seminars in Canberra and Bendigo, delivered by Peter Bobbin, a Future2 trustee and expert in superannuation, taxation and estate planning. 

The funds will boost Future2’s grant program, giving a second chance and hope for a better future to disadvantaged young Australians like those featured in the short films on the Future2 website, www.future2foundation.org.au/Grants/Grantfilms

Every cyclist participating in the AMP Future2 Wheel Classic has realized a personal goal on two levels: achieving a physical challenge while fulfilling a desire to help those in most need in the community. 

Check out the route at www.future2foundation.org.au/events/wheelclassic

See who is riding and make a donation at www.future2fundraising.org.au/event/f2wheelclassic

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AFA CEO Richard Klipin said the Roadshow’s unprecedented success is evidence that the adviser community is looking for guidance and support in what are extremely challenging times.

“In times like these, when advisers are facing great change, they look for support, encouragement, inspiration and leadership,” Mr Klipin said. “Belonging to strong and supportive community is key in tough times .”

Practitioners made up 71% of Roadshow attendees, while the remaining 29% were business/practice development managers and other professionals. Most (61%) were under the age of 50, with 42% under the age of 40.

The highest scoring session, earning a feedback rating of 89%, was a panel featuring presentations from the AFA’s 2011 award winners – the AFA Adviser of the Year, Troy MacMillan; the AFA Female Excellence in Advice award winner, Olivia Maragna and the AFA’s Rising Star, Mark Rattigan.

“The feedback on our panel indicated that delegates appreciated receiving valuable insights from people who clearly are some of the best young advisers in the industry,” Mr Klipin said.

“They are great ambassadors for our profession.”

The panel of award winners will present again at the AFA National Conference at the RACV Royal Pines Resort on the Gold Coast in October, where the AFA’s 2012 award winners will also be announced.

“We believe our awards are a barometer on change in the market place and the quest for excellence,” Mr Klipin said.

“It is the 10th anniversary of the AFA Adviser of the Year Awards and the barometer is reading well. We have received an unprecedented number of outstanding nominations in all our awards and as we narrow entries down to finalists it is clear we have some seriously great talent.”

Mr Klipin said that the AFA National Conference is building on the Roadshow theme which is: Building pathways to excellence: Insight + Insight + Consumers.

“Like the Roadshow, the conference is about providing our members with opportunities to hear from experts and share their own experiences so that they are well-equipped to deliver excellent outcomes to consumers,” he said.

A highlight on the program is an industry panel featuring Jeremy Cooper, Chair of the Cooper Review and Mathias Cormann, Shadow Assistant Treasurer and Shadow Minister for Financial Services and Superannuation.
 
“The AFA National Conference presents another outstanding opportunity for the financial advice community to learn, to share and to connect with industry leaders and their peers,” Mr Klipin said.

“We look forward to once again welcoming AFA members and our colleagues across the country to the Gold Coast.”

Those wishing to attend to the conference are encouraged to book now.

“Registrations are up 18% on last year and accommodation at the conference venue is already booked out,” Mr Klipin said. “Accommodation is still available at neighbouring hotels.”

To download the registration, find out more, view locations, dates and times, visit the AFA website: www.afa.asn.au

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Thirty one of the 40 cyclists who are participating left Circular Quay early on Saturday morning. They were farewelled by AMP Financial Planning’s Michael Guggenheimer and Future2 Chair Steven Helmich.

The puncture tally during the first two days into Canberra was 25, and one cycle had emergency repairs in Liverpool.
This morning Bernie Ripoll MP Parliamentary Secretary to the treasurer gave an official send off to the group from the Royal Canberra Golf Club where Peter Bobbin, one of three Future2 trustees riding, was delivering a seminar to a group of Canberra based advisers and their clients – all part of the fundraising effort.

Keep up with the riders and their daily journey by reading Ray Griffin’s blog – click here.

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The June 2012 Investment Trends Planner Risk Report is an in-depth study of Australian financial planners and their usage of insurance. The study is based on a survey of 929 financial planners concluded in June 2012.

“The volatility in the markets is driving a greater proportion of clients’ investments to cash and cash products,” said Investment Trends Senior Analyst Recep Peker.

“To ensure clients continue getting value from using an adviser, planners have continued to increase the role of insurance advice within their business.”

“This also diversifies revenue streams for planners’ businesses which is beneficial for both client and adviser.”

“Empirical evidence demonstrates the importance of risk advice in the current climate, especially in driving profit growth,” said Peker.

“Our analysis shows that planners reporting an increase in practice profitability derive a greater proportion of their revenue from risk commissions than those who said their practice profitability declined.”

93% of planners now provide risk advice, up from 73% in 2005 (see chart), and they typically spend a fifth (20%) of their client time discussing insurance needs, up from 17% last year. On average, risk advice accounts for a third of the revenue financial planners are currently generating.

High satisfaction remains key to retention
Planner satisfaction with insurance providers increased and is very high overall. The number of planners rating their insurer as “good” or “very good” increased from 77% to 82% over the last year. Planner ratings of individual features offered by insurers are more mixed, giving rise to significant opportunities at an industry level.

“Insurance providers have done a remarkable job addressing some of planners’ key needs identified in 2011,” said Peker.

“Significant improvements in the areas of IT systems, websites and support have helped drive overall satisfaction up.”

“Satisfaction is critically important to retention as planners are very willing to seek out the best insurer for their clients.”

Nearly half (47%) of financial planners said they reduced usage of or stopped using at least one insurance provider in the last 12 months, and a very strong statistical relationship between satisfaction and switching behaviour continues to be evidenced.

“With planners demanding further enhancements to underwriting and technology, these areas will continue to be key battlegrounds for insurance providers over the next year”, said Peker.

The top three insurance providers by overall planner satisfaction in 2012 were:

1. Asteron Life
2. AIA Australia
3. Macquarie Life

Three quarters of planners remain open to switching in the future, with 42% saying they would change their main insurance provider for lower fees, and 34% for better features/policies.

Competition remains very heated among insurance providers
Although planners use an average of 3.8 insurance providers each for new business, they tend to place an average of 56% of their premiums with a single provider, making it crucial for providers to become a planner’s primary insurer.

Following a few years of industry consolidation, the top 5 insurance providers by number of primary relationships are now:

1. OnePath/ANZ
2. AMP/AXA
3. MLC/NAB
4. Asteron Life
5. TAL

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Promises promises!
A website can make pretty much anything look good. We’ve all been there – buying or booking something via a website only to find out later that the item in question is not exactly as it was portrayed on the website.  If it’s of insignificant value it’s easy to look beyond the disappointment however it’s often another matter if the money spent begins to mount up.

I was reminded of this when recently booking some accommodation the owners of which, according to the website, paid very close attention to the finer details of the small house I was renting for just a few nights.  It was with substantial surprise then that I found the house to be far less detailed than the website led me to believe. The refrigerator was filthy; the heater in the bathroom was circa 1970 and didn’t work; the ‘polished floorboards’ were actually linoleum and – you get my drift.

The so-called ‘buyer’s remorse’ emerged for me but only partially. After all, I hadn’t handed over my life savings to the landlord.  However, this example gets to the very nub of expectations and delivery. My expectations had been set at a reasonably high level due only to the information on the website – it was all there in writing.

So too is it all there in writing on financial advisers websites and it is also there in writing in Statements of Advice and related documents. In the late 1990s I marked many Diploma of Financial Planning (DFP) 8 assignments; DFP 8 was where students were required to develop a comprehensive financial plan based on a complex case study. It struck me how often I would mark assignments that contained written statements and claims with words to the effect of:

“By implementing your financial plan you will be sure to enjoy a worry free retirement.”

and

“We will ensure that your portfolio is comprised of the best performing investments…”

and

“Our projections illustrate that when you retire in fifteen years you will have accumulated $X of retirement capital.”

Can you see the expectations being created in the clients’ minds? 

“…worry free retirement”

“…best performing investments”

“…will have accumulated…” 

To be frank, some such comments were not too far removed from some of the infamous claims made by the so-called ‘snake oil salesmen’ of the 19th century who claimed certain medicines were cure-alls for everything from indigestion to tuberculosis.

The point is the planners in question were making promises – setting expectations in the clients’ minds – over which the planners had very limited control or no control at all. No financial adviser can guarantee such outcomes for clients.

Note that the assignment marking was in the late 1990s so now consider just some of the financial events that have unfolded since then.  The 1998 South East Asian Currency Crisis; the 2000 dotcom bubble; the Iraq War which commenced in 2003 the lead up to which saw large sharemarket declines and of course, the Global Financial Crisis the effects of which just keep rolling on.  What about the assurances given in those assignments? What about the promises financial advisers all over the world continue to make to their clients?

A Statement of Advice (financial plan) is just that – it’s a statement that an adviser is making. Used carefully it can help to set very realistic expectations for clients.  Used to ‘sell’ advice that the client might want to hear it can be very dangerous for both the client and the adviser.

Dangerous for the client because such undisciplined statements can embed unrealistic expectations in their thinking.  It heightens the potential for the client to experience ‘buyer’s remorse’ and for the adviser, it heightens the potential that they might end up in dispute with what could by then be a former client. Ultimately it could see the adviser being cross-examined in court.

A quick look around the Internet at sites of financial advice firms reveals that the practice of making questionable claims, about what can actually be delivered, continues to this day.

While it might be tempting to paint a rosy picture to potential clients via your website and/or SoA, the professional, disciplined, approach is to only make statements which will realistically set your clients’ expectations and which you are confident you can defend if required to. 

While your calculations might be mathematically correct, for example, that might not count for much if a former client expected you to deliver a worry free retirement or expected to have a portfolio comprised only of the best performing investments – because you wrote that in their SoA.  Such a client’s legal adviser might be very interested to view copies of SoAs and the like.

Consider the following as alternate statements for the above claims:

“ By implementing your financial plan you have taken another step toward enhancing your financial position in retirement.”

and

“We cannot promise you that your portfolio will always be comprised of the best performing investments; indeed we believe that such an outcome is impossible to achieve. Rather, in managing your portfolio, our aim will be to review the investments regularly, mindful of changes in the Australian and world economies and investment markets, and to then make suitable recommendations for change as the need arises.” 

and

“The projections are an exercise in mathematics and to conduct them, as a means of having an insight into potential financial outcomes for you, we have used the assumptions which follow. However, please note that we cannot guarantee the forecast outcomes because they are dependent on future events such as interest rates, inflation, economic growth, actual investment returns and a host of other economic events and circumstances which are beyond our control.”

The point about statements like the above is that they are aimed at not setting clients’ expectations above what is realistically possible.  No financial adviser can guarantee very much – they cannot guarantee where a portfolio will be in one year from now let alone twenty years and beyond. And no adviser can guarantee to have only the very best performing investments in just one portfolio, at all times, let alone promising the same to each and every client who engages the firm. 

There is no guarantee that such words would protect an adviser in a litigation scenario after all, negligence is neglect and that isn’t confined to words. However, words such as these are more likely to keep your clients’ expectations grounded. None of us are ‘investment gurus’ – we’re planners who try to design and navigate a more secure path forward for clients in full knowledge that the future is uncertain.

The simple, professional, approach is to only promise what you can guarantee and if you cannot guarantee an outcome don’t promise it.

The only promise you should make is to yourself and that is to promise not to give false hope to people who are going to trust you with their financial security.

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