Are you being advised or just sold to?

LAST UPDATED: 15 Feb, 2015 @ 23:27
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Are you being advised or just sold to?

WHILE I appreciate this may seem a strange question to pose, it is actually a the reason people end up with investment products. And more to the point, whether those products are really relevant for their circumstances.

What prompts me to write on this subject is the increasing number of incidents of people having totally unsuitable investment products. Sometimes the problem is one of tax efficiency, which could have been so much better dealt with, but on too many occasions, the product is just simply wrong!

Having spent the last 30 years as an independent financial adviser, with access to the whole market place for providers and products, the basis that I and other professional advisers like me work on, is that of an advice led practice, where you get to understand what an individual client is trying to achieve; what their hopes and sensitivities are and what resources they have available to enable them to achieve their goals. The financial planning solution will take all of those factors and more into account when structuring the right advice.

Sometimes this will result in a solution, which involves the use of investment products, but occasionally there will be no need for products at all. That’s what I mean by advice led.

The alternative scenario is where you are faced with a product salesperson who is product led. They may work for a bank or insurance company or they may be promoting themselves as independent advisers but in fact, there main driver is to sell product, whether it fits or not, and to sell of much of it as they can.

Their training will teach them some basic sales techniques which will be based on the following principle – Need, Greed or Fear = A Sale!

By that I mean they will be trained to identify whether a potential customer can be persuaded that they need the product of they are enticed to buy it with over zealous promises of high returns. In the third case they will try to identify fear – often this is in the form of fear of the taxman taking a big slice from them. We saw that with the Equity Release debacle, when hundreds of people were convinced they had a Spanish Inheritance Tax problem and were sold an expensive mortgage linked to a poor investment contract that was supposed to repay the loan and a means to avoid the tax.

The reason that Equity Release was sold to so many people is that it appealed to Need, Greed and Fear. People may have needed extra income, were greedy for the promised returns and were frightened of the tax that might be due when one of them died – it all ended in tears, except of course for the product salesmen who banked a hefty commission and they are probably now selling timeshare or some other commission focused enterprise!

So beware and just ask the question – am I being advised or being sold to?

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5 COMMENTS

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  1. my moneys safe….im told….a while ago ….quite a while ago…..by nigel goldman………..btw is it me or does the above gentleman look like a worried bergerac??? god, i miss my bbc!!!!!!!!!!!1

  2. nahhhhhhhh stefano i do these silly things like meeting people,of all nationalities,chatting,socialising,writing letters,gardening all those things done before technology like face book came along for people to let thousands know they had cabbage for tea!!!!!!!!!!!! i suppose i will get bbc,etc in time but you can,t beat a good book! soaps, eastenders,etc, have always been banned in our house

  3. Oh, I don’t know. Some good tunes on BBC Radio three. Radio Four chirps merrily away on diverse subjects. World Service is a must. BBC doesn’t have to mean telly. “Banned in your house”?!! Surely you mean a democratic agreement was reached, where all concerned had an equal vote, when deciding not to watch brain candy?

  4. Changing the subject slight, but still in the investment side of things I did read somewhere of concerns regarding the possible pension freeze. (EU may step in) Looking back from just the year of 2000 up to 2014 regarding basic pensions the increase has been on average £4.67 Pence a week over the 14 year period.

    Therefore taking this into account living in Spain far outweighs the cost of not living in the U.K and if a pensioner cannot absorb that cost what the hell is he doing living in Spain.

    Mind you in 2017 the weekly basic pension will be a flat rate of £144 pounds, that’s if one reaches that year.

    What say you?.

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