Best Practice Advice Means Meeting Client Expectations Too, doesn’t it?
Advice Processes & Best Practice Advice & Compliance

Best Practice Advice Means Meeting Client Expectations Too, doesn't it?

April 11, 2022

by Tony Vidler  CFP logo   CLU logo  ChFC logo


What constitutes “Best Practice” advice process is a constant work in progress, but it does not develop as rapidly as either technology or client expectations do.  In fact, there is a distinct probability that the gap between what professionals call best practice advice and what clients expectations of best practices are  continue to widen.


The danger for advisers is that we err on the side of what our peers determine a good process to be, rather than err on the side of what the customer expects or wants in rapidly changing world.  “Best practice” advice processes when we get right down to it are merely what the professional end of the industry has decide they are, and then law-makers pick those standards up and create rules to impose them upon the rest.  So best practice standards are more often than not the creation of the academically-inclined legacy builders of the industry.  Therein lies the core problem with “best practice standards”.


Scant consideration is given to what a consumers interpretation of best practice” might be.  Compounding that is that once best practice standards are defined by industry, taken further by law-makers, and then eventually become regulated standards the consumers have moved on with their expectations.  The industry is behind the proverbial 8-ball…

Now, I do accept that advisers need to attain many of objectives and principles which have been defined.  We should have to document the advice process in a rigorous form which stands scrutiny in the future and validates the decisions and recommendations made.  We absolutely should seek transparency and trust, and apply some robust critical thinking to creating satisfactory client solutions.  Equally though, we have a moral and a commercial obligation to meet the markets expectations: to deliver what the customer wants to pay for.  


The majority of customers simply want a specific outcome achieved in a cost effective manner, and preferably quickly and conveniently.  30 or 40 or 80 pages of pie charts and industry jargon?  The majority of consumers don’t want that.


The point in re-visiting this issue is to consider the ethical, or moral, requirements.  Not the compliance requirement or our commercial interests, but the ethical requirement.  Somehow in recent years ethics have been interpreted by many to be the same thing as compliance.  “I am ethical if I follow the prescribed process.  Therefore someone who does not follow the prescribed process must be unethical.”  It is of course not quite that black and white.


Ethical is as about conduct, and it is as much about not doing some things as it is about doing other things.  What we don’t do is just as important as what we do do when it comes to defining ethical behaviour.


An ethical adviser will transparently address and then try to avoid or resolve any apparent conflicts prior to client engagement.  They will also be essentially driven by the tenet of “put the clients interests first“.  These are the essential components of what we accept “ethical” behaviour to be, and I do not question these at all.  Certainly an ethical adviser will also be compliant – following the laws of the land – and will also endeavour to follow best practice processes.  


However, I do question whether we narrowed the definition of “the clients interests” to the point where it prevents us delivering as much value as we could?  


The clients interests are not necessarily met by ensuring they obtain a greater commercial benefit than we do from any transaction; what is wrong with achieving equal benefit to both parties?

Clients interests it is more than an argument about who the winner is from an engagement.  The client must win of course – there must be fair commercial value for them.  The industry has become so consumer by trying to ensure that the consumer is always a clear winner commercially that it has lost sight of a key principle:

The clients interests are more than just what we say the clients interests are.  It is what the client says they are too, or what their expectations are.


Client expectations is the key concept which is getting lost in practice.  Process and protection are now paramount. Brevity is bad.  Veracity reinforced by volume signifies value apparently.


Is it what the typical client considers valuable though?


My point I suppose is that the more we allow process and protecting our butts from a compliance perspective to dictate how we will engage and communicate with clients, the less likely we are to be meeting their expectations.  If the clients interests (as the clients themselves might define them) were paramount we would be seeking to ensure we understood exactly what their expectations are when engaging, and then deliver information and recommendations to them in the way they want rather than in the way a third party said we should.  That, combined with our existing understanding of what is ethical behaviour, would constitute the ideal moral position.  That is delivering what is “in the clients total interests”.


I see good advisers lose good clients simply because they do not do this.  These are good ethical people we are talking about, who are working with good honest clients who want to work with an adviser.  When the adviser has allowed the process to dominate (and often also intimidate) then many clients abandon the engagement entirely, or perhaps disengage in part by not following through on recommendations in their entirety.  That is hardly in anybody’s interests.


We can not and should not ignore the requirements of compliance and accepted best practice processes, but nor should those objectives dominate behaviour.  We do need to refine and adapt engagement tools and processes outside of the mandated methods as well.  The highest ethical position for a professional to adopt is the one which exceeds the expectations of both their peers and their clients.  To achieve that we must be prepared to drop the excessive disclaimers and report padding and focus on delivering succinct and sensible advice which is both suitable for the client and delivered in a comprehensible form.  Do away with the unnecessary data collection, and stick to collecting only relevant information once the scope is known.  Consumers don’t need 3 hours of mapping their grandparents medical history when they want to set up a retirement plan.  The industry has gone mad in this area.  Just as mad as it has over 40 pages of legal crap when someone just wanted a long term investment strategy defined…which could have been produced in perhaps 8-10 pages with all rationale and assumptions outlined clearly.


It is after all entirely in the clients best interests that advice is delivered in a way which meets their expectations in the engagement, which also makes sense to them, and which inspires them to act upon it.  If we are not delivering advice in a form which achieves that then whose interests are we serving?


Not the customers, that’s for sure.


You might also be interested in this related article:

Client Focus or Compliance Focus?
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