Informed Choice managing director and chartered financial planner Martin Bamford was quoted extensively in an article in Professional Adviser magazine today, talking about how we approach risk management.
Martin Bamford, chartered financial planner at Informed Choice, says: “Desk-based monitoring is not something we’re in favour of because it’s done after the fact and often remotely, both of which increase the likelihood of oversights occurring.”
The firm embeds its compliance checking process into the work stream: “We view it as an ongoing process rather than a single event at one point in time. For example, for the past five years we’ve undertaken document writing prior to delivery. That way the client can get to grips with any issues before the deal’s confirmed and any questions or concerns can be addressed.
“A team-based approach also helps; collaboration on advice before it’s delivered is a very effective means of minimising risk. Having just one individual working on a file from inception to completion increases the risk of errors occurring.”
Informed Choice also avoids risky areas of advice and products: “Pension switching and structured investment products are two areas with potentially heightened compliance risks,” says Bamford. “The obvious expedient of having well qualified people and a remuneration scheme that rewards quality of advice rather than product sales remains one of the most effective ways of mitigating risk.”
We believe that our approach to risk management not only protects our business from the impact of regulatory intervention or bad publicity, but also provides much needed reassurance to our clients.
Standard practice in the rest of the IFA market is for compliance checks on a limited number of client cases. The article in Professional Adviser highlights large IFA firms that are only checking between 25-35% of files.
This approach to file checking, something that is usually carried out after the event, creates the opportunity for inappropriate advice to find its way to the end consumer before it can be identified and rectified.
The embedded approach to compliance and risk management we have created at Informed Choice means that it becomes an ongoing process, rather than something that occurs at one point in time.
In the old days, it might have been just about acceptable for a sole financial adviser to do everything from deal with a new client enquiry through to submitting an application form to a product provider.
With the increasingly complex nature of retail financial services, tougher regulation and a more financial aware consumer, this is a model that now looks increasingly unattractive from a risk management perspective.
You can read the Professional Adviser article in full here.
