In his latest column for PA, Keith Churchouse explores the quiet demise of Equitable Life, the marketing merits of provider product pushes and why he advocates a ‘vanilla’ house investment view (with the occasional flake thrown in for good measure)

Sure, we know that the general election, Christmas and the New Year are over, and the new decade has begun.

It proved to be a busy end to the ‘teen-ies’, but with all this noise going on, it was easy not to spot Equitable Life slipping away on New Year’s Eve to Utmost Life after about 19 years of angst and wrangling that saw many experience financial losses.

There were no fireworks or celebrations as the oldest Mutual, founded in 1762, slipped away.

Many questioned if it all looked too good to be true whilst it operated up to December 2000. As we know, the answer proved to be yes, although the final addition being paid to with-profits policyholders may go some way to recompense what proved to be an unwelcome scandal in the industry.

Acid test

And has much changed? With one ‘celebrity’ fund manager following different (but somehow similar) lines during 2019, and with many expected to lose funds, the answer appears to be ‘no’.

And this to me raises the acid test for all investments that we as advisers are offered. Use your own sayings as to how you phrase this, but if it looks too good to be true, it usually is. Would you buy what you are being offered? Because if you have any doubts, why would you take the risk for your clients?

Every day, give or take, we receive an approach to invest into a ‘new opportunity’.

I am not referring to the obvious, and quite often ridiculous, offerings that opportunistic providers think that we cannot see through, often offshore, unregulated and residential property-based. Sometimes amusing at face value when reading through the text (especially the ‘guaranteed annual yields!’), there is nothing funny about them if an adviser wants to get involved and commit client funds to the investment ‘solution’.

In addition, let’s not forget the regular contact from mainstream providers offering packaged products which are nothing new, but are ‘dressed to impress’, which in the main they don’t. And this usually means one of two things:

  1. They do not truly understand our work, or client outcomes, just ‘here’s something you want to sell’ or;
  2. They just think we are easily led by their marketing

I often wonder if our clients know how much filtering we do each week to allow us to make suitable investment recommendations using appropriate (and robust) investment options. Late adoption can be a very good thing.

Our professional bodies have spent years improving standards in qualifications through structured education. I applaud their work, it has made a real difference to the adviser community and I believe to positive client outcomes. However, I am not sure that all providers, good and bad (and the ‘just should know better’) have achieved this advancement, although some are leading the field in the training of their employees.

Patience is a virtue

The ‘new kid on the block’ might look great, but we let them perform first before committing client funds. This has been a prudent move on a number of occasions over the years and we will continue to take this view.

Some might fairly argue that the view detailed in this article is purely about ethics, but I think it’s more than that.

I think it’s about having a ‘house view’ for investment planning, a firm-wide opinion if you like, that your team members buy into and agree with. It’s also about being open to new ideas, but with one eye on the past and the agreed house view, matching the opportunities with the client’s needs and objectives.

If you are confident with your ‘house view’, and you should be, publish it on your website and update it regularly to reflect the changing economic climate. Perhaps this might give your clients and new enquirers far more insight and confidence into how you as a business operate for investments, and perhaps far more than any FCA register could offer (when it fully returns… what utter madness!).

Some might suggest that our investment views are a bit ‘vanilla’ (this comment was – fairly – applied to us recently) in their outlook. I know many of our clients love vanilla in a cone… but maybe perhaps with a flake in the top occasionally – a 99, yummy!

Keith Churchouse is a Chartered financial planner and director at Chapters Financial

This article originally appeared on Professional Adviser on 30 January 2020.