First, his apology two years down the line came across as empty and insincere, not least because it’s simply too late. If you are going to say sorry, then straight after the event is the accepted policy. Second, there is the nature of the apology to consider. Clegg’s very public mea culpa in many ways is in keeping with our times, with virtually the entire financial services industry forming a queue to do the right thing and say ‘sorry’ to customers, shareholders and regulators alike. And when a wrong has been done, this is absolutely the right thing to do.
But Nick Clegg’s apology for ‘reneging on a promise’ puts a whole new perspective on our role. If we as professional advisers make promises to our clients about financial outcomes, we would be hit with a very hard regulatory stick. Certainly we can use our expertise to put our clients in the best possible plans and products to meet their financial goals and objectives based on the information given to us. There are no promises or guarantees, but projections which are based on economic outcomes and the prevailing regulatory regime, alongside the changing personal circumstances of our clients.
The overwhelming majority of financial advisers do this well. Working diligently to put clients in the best position to fulfill their objectives, while also ensuring that practices and procedures fall within regulatory guidelines that keep us and our clients on the right side of the law. This is no small undertaking for international IFAs who have the legalities of a number of jurisdictions to research, interpret and keep abreast of.
Broken promises
Yet while we are not in the market of making promises we can’t keep, the ‘promises’ made by others do affect our profession profoundly.
The government’s triple hike in the cost of tertiary education in the UK means clients with plans structured yesterday to meet the education costs of tomorrow now find themselves woefully short of the mark. The two years’ notice given in the current economic climate is simply not enough time for many to make up the required shortfall. So it’s now down to those of us on the front line to make sense of the changes and realign savings accordingly. For many expat clients with children about to attend university back in the UK, there will be little choice but to fund the rises from current income.
As a profession, it’s one thing telling clients that a change of regulation or deteriorating economic circumstances require a change of direction if they are to meet their financial objectives – most understand this is part and parcel of financial advice. But it’s an entirely different matter if we are forced to sit down in front of clients and deliver bad news due to a broken promise.
In this case, sorry is simply not good enough.
David Howell is chief executive of Guardian Wealth Management
