As those of you who are familiar with the Collaborative process will know, the role of a Financial Neutral has been developed in line with the international ethical standards produced by IACP:
http://shrunk.net/5508e664
These guidelines make it clear that the Neutral must hand the process over to an Implementer at the appropriate stage and cannot maintain a relationship with the client, beyond the Collaborative process.
An argument has been put forward, that to restrict the relationship in this way takes choice away from the client and is not on a par with other professionals that might be involved in the process.
- For example, are there restrictions on an Accountant who is brought in to the process having a continuing relationship, or the Collaborative Lawyer cross-referring to others in their firm for Wills, Conveyancing etc.?
- If the client has built up a level of trust with this highly qualified, Resolution Accredited Financial Planner, then why shouldn’t they have the option of engaging them for Implementation?
- Otherwise, who is going to police the quality of the Implementer?
- It has even been suggested that there will be additional cost, through duplication of work (it is an FSA requirement to undergo a ‘know your client’ process).
My view, for what it is worth, is that to stray from the current path would be very dangerous indeed.
The role of the Neutral needs to be just that. Neutral. The advice that they give must be fee based, generic and not product related. For there to be any hint of conflict of interest, or ulterior motive, could be disastrous.
Our ‘profession’ is not renowned for its’ self-policing abilities.
In any event, I don’t see that there should be any problem for the client if the process is managed properly.
Any Neutral worth their salt will recommend that a fellow Resolution Accredited IFA be used for Implementation. Otherwise, if the clients have existing IFAs, then they can be briefed by the Neutral as a part of the process.
The flow of information between Neutral and Implementer should avoid duplication of work, without any FSA/Compliance issues (bear in mind that the role of the Neutral is not a regulated activity) and the client should be well informed enough by the end of the process to make an ‘insistent customer’ request to the Implementer, avoiding any unnecessary duplication of work and minimising cost.
Here’s the rub:
The lifeblood of most IFA firms is the recurring income that it receives from funds under management, which make the role of the Implementer potentially far more lucrative than that of the Neutral.
For what it’s worth, I do not believe that the IFAs who put forward these views are thinking of anything other than the good of the client. However, it would be a crying shame if accusations of commercial interest were to reinforce a stereotype image of the Financial Adviser at a time when we need to assert our professional standing as an integral part of this process.
If others in the equation have potential conflict of interest issues to deal with, then let them deal with it. Just for once, maybe the IFA should set the bar.
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Bless you, Tom, for putting your head up above the parapet on this one. The issue requires IFA to go through a pain barrier (in a way similar to the one that we as lawyers had to go through - that of advising clients without the court's rules as guides). The role of the financial neutral is such a powerful one that it needs a strong structure to contain it. It is crucial that IFAs do this however, lawyers need them at the table - families need them there - if good solutions are to result. I hope that lawyers will realise the need soon, so that work-flows will rise to a level that IFAs will realise that there are also these new ways of earning their honest crust. James Pirrie
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