However, if intermediaries want to survive in the post-RDR world, they need to rediscover their selling skills, Legal & General Network managing director Duncan Crocker argued in Mortgage Solutions earlier this month.
So, what is the line between selling and advice? For this week’s Marketwatch, our commentators are:
Legal & General Network managing director Duncan Crocker, who argues selling and advice is part of a dynamic process.
Pink Network director Mark Graves, who says dropping sales targets would be nonsensical and would prevent the identification of talented staff.
Just Us Financial Solutions principal Dominic Hennessy, who says customer relations rather than one-off sales make financial advice profitable.
Duncan Crocker, managing director, Legal & General Network
In reality, selling and advice are the same thing, with one being a more professional representation of the other, and in a modern professional financial services sector I much prefer to read about ‘Advisers’ than ‘Salesmen’. That title portrays the right image of the job we are doing every day in order to provide long term critical financial solutions for our customers.
I don’t think there is a line between selling and advice – it’s not as if one process stops and another starts up. It’s more of a dynamic process with elements of both blended. After all, you probably need to quote and ‘sell’ the need for advice in the first place, particularly if you’re going to charge a fee for the advice you give.
As I said in my recent blog, a great advice outcome is a happy and satisfied customer who knows what they have bought and why and that it meets their established needs.
Ultimately, good advice isn’t free and I believe consumers understand this and expect advisers to be paid fairly for what they do. The world we are all living in, especially post RDR, demands that we advise our customers thoroughly and leave the appointment proud of a job well done.
Mark Graves, director, Pink
It is, of course, possible to give honest advice while selling, and it would be nonsensical to drop sales targets, as how could you differentiate between someone who was doing a good job and someone who wasn’t? However we must make sure the target setting is relevant to training and improving quality of service rather than generating profits.
The problem is this: advice is fine if there is a want and a need as in a mortgage sale, but what happens when you identify the need but not the want? Offering advice is then not enough – we know this as the figures speak for themselves. As a nation we are totally underinsured as individuals – our cars and animals are fine, mind you!
The want has to be substituted by a sale. Selling creates a want by delivering a set of circumstances the client can relate to. Monitoring performance allows you to identify those sales people who can create the want in clients. Advice only sales are carried out by order takers.
We need sales people to deliver a nation which can look after their families as a result of unforeseen circumstances. And, more importantly, change their wrongly-held perception that the state will look after them. Advice alone will not change this imbalance anytime soon.
Dominic Hennessy, principal, Just Us Financial Solutions
There is no definitive line between selling and advice. It is a mixed up world that can only be discovered with time, experience and intuition. The lucky will find it through great sales management and learning. The unlucky will be taught poor techniques or worse.
So actually the ‘moral’ line initially comes from sales management and corporate responsibility. The industry of financial advice becomes profitable through great customer relations – rather than lucrative one off sales. So a sensible and well-run company will invest for its future through great training and building for the future whilst maximising sales now. A fine balancing act indeed!
Of course mortgages have a completely different sales process to insurance. In the former case, a prospective client will come looking for you (in the case of those who have invested in their reputation) while in the latter, the client is rarely aware they even require it.
As far as sales targets are concerned, I expect these to exist in any properly-run company forevermore. Only in the UK do we frown on the term salesperson – usually through association to the term misselling, which the dawn of RDR will go a significant way to rectifying through the imposition of higher professional standards.
Real responsibility though should lie with management until individuals prove themselves capable of maintain long lasting relationships with financial aware clients.