The Era of the Conscientious Adviser
Andy Jervis, Chairman, gives us the lowdown on how advisory roles have changed over the years... for the better!
I started work with The Norwich Union Fire Society, and it was expected that if you wanted to progress you needed to study. Being able to advise on the complex areas of fire, property, liability and commercial insurances required a good working knowledge, and entrants into the business were required to have minimum academic qualifications. As a result, the sort of people who were attracted to this type of work tended to be career focused, reasonably intelligent and conscientious.
A few years later I spent a short time working for Abbey Life, one of the new breeds of life insurance offices created in the 1970s along with Hambro Life Assurance, which later became Allied Dunbar. Here the culture was shockingly different.
The sole criteria for success at Abbey Life was the ability to sell more policies. New recruits were sent out into the field to knock on doors, cold call and canvas potential clients with virtually zero training and no practical or technical knowledge of the business whatsoever. Consequently, those recruits were a mixed ragbag of people from all walks of life, usually taking a very short-term view of this potential new career, but hugely attracted by the very significant commission earnings that they could make from sales.
Successful salespeople tended to be outgoing and thick-skinned, and the requirement for a conscience was not high on the employers list of desirable attributes.
I didn’t last long in this environment. Indeed, when I started my own practice a year or two later I resolved to do things differently. I tried to make sure that the advice that I gave was based on solid foundations, and that I could continue to look that person in the eye over the years, knowing that I had done a good job for them. It’s a philosophy that seems to have paid handsome dividends over the last 34 years.
Over that time there has been massive change within the financial services profession. The Financial Services Act of 1987 created the basis for a new profession, but it took nearly 3 decades before the Retail Distribution Review (RDR) introduced a minimum level of qualifications for financial advisers and commission payments were outlawed in most circumstances. The untrained, gung-ho advisers of old have gradually been replaced by a new cohort of financial professionals for whom their career choice is made at university level.
I was therefore delighted when I read the conclusions of a study by Mark Pittaccio, an expert in behavioural economics. In a survey of more than 130 investment and pension advisers, the study measured respondents on five personality traits: extroversion, agreeableness, conscientiousness, intellect and emotional stability. Conscientiousness came out on top, which Mark suggested was in contrast to the public perception of advisers as high-pressure salespeople.
Furthermore, the report demonstrated a clear link between an individual’s level of conscientiousness and their happiness and success in their profession. Advisers who look after their clients enjoy their jobs more, are better able to embrace new challenges, and typically earn more than those whose central goal is to sell a product.
None of this is news to those of us who have been practising these principles for a very long time, but it is interesting to see these conclusions supported by academic research. This will be of particular interest to both potential candidates for a career in financial services, and employers who are seeking good people who can succeed as a result of personality traits that match the characteristics of a great financial adviser.
There are still plenty of examples of dubious practice out there in the marketplace, but there is no doubt that standards have moved on dramatically over the last few years and will continue to do so in the future. This is great news for anyone seeking advice, for people looking for a brilliant career, and for firms who are able to successfully marry these two together.