Compliance makes adviser life difficult

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Advisers are struggling to adapt their client communication, thanks to onerous demands from compliance departments.

Fee Disclosure Statement and SOA communication needs have changed, but The Fold managing director Claire Wivell Plater is worried that advisers are too accustomed to the language they already use and that they don’t realise where their communication is failing.

“They don’t realise sometimes that they use passive language, they use jargonistic terms or they don’t fully explain how the remuneration is collectively paid and what’s deducted…Because they’ve got a compliance person who’s really not a communicator, writing this stuff.”

She says there are three main challenges for advisers:

  1. Having the courage to know what they can throw out
  2. Expressing it in direct language, not passive language
  3. Getting the legal department off their back with all the disclaimers they have in place

 “A disclaimer belongs in a contract, it doesn’t belong in an advice document,” said Wivell Plater. “Compliance departments – of the large organisations in particular – try to make these things bullet proof by having disclaimers of all sorts in everything and sent to every client, and it loses its effect.”

She says that if advisers were treated as professionals by their peer group and their stakeholders then they wouldn’t need all the disclaimers. “A doctor and an accountant don’t disclaim their advice. They can never achieve true professionalism unless they get out of that mode.”

This inability to communicate clearly and trying to include too much may even result in being non-compliant. She says that the key thing for advisers to do is distinguish between a client objective, an adviser strategy and a means to achieving that.

“It means they can link their recommendation back to the client’s objective. But if they start by calling the strategy the ‘client objective’, they can never really do that in a way that client understands.”

The problem is that many larger institutions want to use templates for a very personal service, but Wivell Plater says that advisers really need to put themselves in the shoes of the client, and write from the perspective of what a client wants to read.