Meeting Client Expectations Is In The Clients Interests Too, isn’t it?
Advice Processes & Best Practice Advice & Compliance

Meeting Client Expectations Is In The Clients Interests Too, isn't it?

August 18, 2017

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.  In fact, there is a distinct probability that the gap between what professionals call best practice advice and what clients expectations are will 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.


I have written before that we do in fact have to achieve both objectives.  We do have to document the advice process in a rigorous form which stands scrutiny in the future and validates the decisions and recommendations made.  So we have to follow an accepted or legislated best practice process.  Equally, we have a moral and a commercial obligation 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.  80 pages of pie charts and industry jargon?  Nah, not so much….well, not for the majority of consumers anyway.


The point in re-visiting this issue is to consider the ethical, or moral, requirement.  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.


Certainly an ethical adviser will be compliant and will also endeavour to follow best practice processes (and they are 2 different standards).  An ethical adviser will also 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.


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 more than ensuring they obtain a greater commercial benefit than we do from any transaction; it is more than an argument about value delivered or derived or who the winner is from an engagement.  The clients interests are more than ensuring we make available any and all possible pieces of pertinent information too, so it extends beyond transparency and asymmetry of information issues.  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.


Expectations is the key concept which is getting lost in practice I feel.  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?


Is an abundance of detailed information and disclaimers in their interests, as they might define the term?


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 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) too 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 we do need to development 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 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.


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?


You might also be interested in this related article:

Client Focus or Compliance Focus?
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