Trust can be defined as a
“firm belief in the reliability, truth, or ability of someone or something“
According to YouGov.co.uk “Trust and reputation in Financial Services have never been in the spotlight more than it is today”
And I have to agree. Trust in financial services has been worn down over the past 20 years or so. Mainly due to miss selling scandals including Endowments and PPI.
Too often people who work in the financial services industry have been much to concerned about commissions and not concerned enough about the consumers they have been advising.
Recently however there is a definite shift. A shift being lead by Government. The Retail Distribution Review or RDR as it is called for short has brought about some of the biggest changes in financial services history. Unfortunately the communication of this to you out there, the consumer, is sparce at best. Basically the changes have led to financial advisors being required to pass higher level exams, complete 35 hours of Continued Professional Development per year to be able to keep practicing.
The other big change is the ban on commission payments. Investment and pension providers are no longer allowed to pay us commission. Or any incentive to pass them business.
So how many who will read this believe that this will lead to more trust in financial services. Most of the advisors who were about before the changes are still there. It is my believe that it is a culture change that is required in financial services. A shift from “ohhh I wonder how much of a fee I can get!” to “Absolutely acting in the best interest of the client regardless of fees”
Since becoming a financial advisor in 2009 I have been of the belief that giving consumers the best possible advice regardless of fees I charge will lead to more client referrals and a more successful business. I still need to make a profit, as do all businesses, but a fair profit for the service I offer.
Back to Trust. I was always told that you have to earn trust, it isnt given to you straight away. I understand that it is difficult to trust someone with your money when you have only know them for a short time. In my next blog I will explain how you should choose a financial advisor. There are steps you can take to make sure that you are receiving good advice. The most important being that the person you are receiving the advice from is qualified. Ask them for their Statement of Professional Standing (SPS). I would be impressed if a potential client asked me for this. I haven’t been asked yet. Check them out on the Financial Conduct Authority Register. You will be able to see if they are authorised to give advice, have any disciplinary against them and their history.
When investing money make sure that you know what you are investing in. If you haven’t heard of Cape Verde, why invest there?
If you are not experienced in investment make sure that what you are investing in is a regulated product. At least you will have the protection of the Financial Services Compensation Scheme.
If you opt for a free advice service be careful. Generally in this world you get what you pay for and if you are getting something for free how good is it?
Its better to be safe than sorry!
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