Tag Archives: T&C

Training and competence

Training and Competence: what Sir Alex Ferguson can teach us

Training and Competence (T&C) hasn’t changed much over the years. So when Harvard Business Review announced that it had distilled the ex-Manchester United boss Sir Alex Ferguson’s success into 8 key themes, I was interested.  After all, what was it about him that made his footballing record second to none? What can T&C learn from him?

What struck me about Ferguson is that he never set out to create just a great team – he set out build a successful club. In our world, the equivalent message is it’s not about just being good at T&C, it’s about building a business by making staff more professional and the business more effective.

I’ll take the first four of these eight ‘leadership lessons’ in part 1 of this blog and provide an alternative view on Training and Competence.  

1. Start with the foundation

Ferguson’s message: Start at the bottom and get future talent in place that enable you to build not only a future team, but the future club.

The message for T&C: Central to what Ferguson did was development, development and more development. Part of this story is about bringing in new blood. In our world, the growing status of para-planners should provide a career path for those that aspire to becoming professional advisers. For sure, he was able to attract young talent by using the name of Manchester United but it would also be doing him a disservice to say that this was the whole story. Along with raw talent, he insisted that there was investment in an academy and in the right sort of coaching staff. Arguably, the most impressive lesson we can learn from Sir Alex is how he was able to consistently get the most from the existing players and drive standards up. More about this in point 2.

2. Dare to rebuild your team 

Ferguson’s message: he assembled five league-winning squads whilst continuing to win trophies. He identified that the life-cycle of a successful team lasts four years.

The message for T&C: Be strategic. What does your business need from staff within the next one to four years? For example, what skills and knowledge areas will the business need? What would help us to be even better at what we do? This might involve bringing in new talent; often, it will need more from the existing experienced staff.  If a firm is to be effective, sitting still is not an option.

T&C should stretch existing staff. He created a positive culture; one that set an expectation and said that you should never put a ceiling on development. It is the role of Training and Competence is to see people as they could become, not as they are.

3. Set high standards – and hold everyone to them

Ferguson’s message: It’s as much about instilling values in players is it is about technical skills. Ensure everyone wants to do things better, work hard and never gives up. In other words, make them winners.

The message for T&C: You get what you measure. But as most firms measure compliance and not competence, are we truly focusing on the client and in the process, making the business more effective? With the Senior Management and Certification Regime (SM&CR), competence is now a business-wide issue – just about everyone has to be competent and be able to prove it.

You can simply illustrate this as follows:

From this, it is clear that you can be compliant, without being competent. Equally, competence is something that goes well beyond being compliant. So if we did genuinely re-balance T&C to focus on competence, we’d measure things like: client satisfaction, adviser behaviours, relationship skills and business results. When we just measure compliance – which admittedly is easier to do – we look at areas such as persistency, complaints and range of advice. For example with a compliance-focused approach, a client observation form will typically record the adviser’s adherence to FCA rules, not a coaching tool that focuses on the actual client experience.

From a business perspective, if we want winners, we need to focus more on what really matters.

4. Never, ever cede control

Ferguson’s message: The manager cannot be controlled by the players. If certain players are affecting the dressing-room atmosphere, you have to change this or cut the cord. If you want to maintain high standards, you need to take swift action when these aren’t followed. 

The message for T&C: Sometimes, you have to make tough decisions. As in football, sometimes there are people who like to think that the rules don’t apply to them. More generally, T&C contributes to the wider culture within the business. The more people see that Training and Competence is about development and not just monitoring, the more T&C is seen as being relevant. More buy-in reduces frustration and the scope for discord.

Read part two of this blog, click here.

Access the FCA Training and Competence rules, click here.

To find out how we can help you audit your Training and Competence arrangements or make them more effective, click here.

Remember, T&C doesn’t have to be boring.

Ian Patterson, T&C specialist and author of the CII’s J07 (Supervision in a Regulated Environment) and AF6 (Senior Management and Supervision) study texts.

FCA T&C supervisor

FCA T&C Supervisor: what you need to know

This article answers the five key questions we get asked about being a FCA T&C supervisor.

Rules on Training and Competence (T&C) have been around since 1993 – over 25 years ago – so there isn’t anything particularly new about T&C. That said, there are still plenty of myths and misunderstandings about what it is, and why is it important.

Before I start, let me just share with you something I was told many years ago by a regulator. They said: “T&C is only as good as its supervisors”. To this day, nothing could be more true.

1. Who needs to be FCA T&C supervisor?

First of all, let’s accept that the term ‘supervisor’ is widely used everywhere as a generic description for a people manager. Under the FCA T&C rules, however, this is a specific regulatory expression which has specific FCA rules that need to be met (see the next section).

In simple terms, anyone who provides advice needs to be supervised. So a retail investment adviser, mortgage adviser or general insurance adviser (e.g. those that advise on protection policies) must have a supervisor under FCA T&C rules. If you don’t supervise these three roles (or some specific back-office roles that you’ll usually only fine in a product provider or fund manager), then you aren’t a ‘supervisor’ under FCA T&C rules. Simple.

But what about anyone who ‘manages’ para-planners? They are not a T&C supervisor but under the Senior Managers and Certification Regime (SM&CR), anyone performing a ‘significant harm function’ does need to be supervised. If your business defines a para-planner as a ‘significant harm function’, then they must have a supervisor. Similarly for MiFID firms, roles like para-planners will be classed as ‘information givers’.  They also need to be appropriately supervised unless classified as competent.

As a result, the population that needs to be ‘supervised’ under various FCA requirements is a lot bigger than just those that are subject to T&C. Many firms will also use the FCA T&C supervisor rules (see next section) as best practice for people who supervise these other roles, even if they don’t strictly need to.

Competence v compliance. Read more about why competence is now a firm-wide issue.

2. What are the FCA rules that apply to FCA T&C supervisors?

Under FCA rule 2.1.4, there are four things that a T&C supervisor must be able to do and be able to prove:

  1. Coaching skills. This isn’t defined anywhere so this could also include feedback skills. Click here for more information of what this might look like.
  2. Assessment skills. The ‘C’ in T&C stands for ‘Competence’ so this rule expects the supervisor to assess (or contribute to the assessment) of an individual’s competence.
  3. [Relevant] Technical knowledge. It’s difficult to assess what someone is saying is correct if you know nothing about the subject. As a result, supervisors are expected to have technical knowledge so they can identify inaccurate or misleading information.
  4. Level 4 Qualification. This is required where ‘trainees’ are being supervised. If the supervisor has a team of competent advisers, then this isn’t required under T&C rules, but is obviously desirable in many cases.

3. How do you prove a T&C supervisor is competent?

Most people will have heard the expression ‘if it isn’t written down, it didn’t happen’. So how do you prove that a T&C supervisor is competent?

Firstly, you need to know that the FCA rarely accepts the principle of ‘grandfathering’. If you are relying solely on 25 years of experience as a manager as your evidence that you are a competent T&C supervisor, then think again. Have you worked for a wide range of businesses in a leadership role? Nah, that won’t cut mustard either. You might have great skills and experience, but these in isolation can’t prove you are competent T&C supervisor.

So what do you have to do? I’ll look at this from two perspectives:

  1. On appointment as a FCA T&C supervisor. I’ve already looked at what the FCA rules require you to demonstrate. The difficulty for most is demonstrating the two skills – assessing and coaching. These could be evidenced in the workplace or by attending our in-house workshop – which is designed to do just that. It should be possible to evidence relevant technical knowledge easily enough using CPD and a level 4 qualification will be straightforward in that you either have it, or you don’t.
  2. Ongoing competence. If the FCA have gone to the effort of identifying two specific skills they expect supervisors to demonstrate before they supervise, sensibly the process would be repeated every 2-3 years to make sure these are still current. In my experience, however, rarely does this happen. There should be documentary evidence of the supervisors activities, e.g. observation aids, development plans etc and this helps to demonstrate their competence. In addition, CPD should include evidence of ongoing supervisory development. Some people will also take the CII’s J07 exam for supervisors. In short, a range of sensible CPD activities that relate to supervision should do the trick, along with a periodic re-assessment of their supervisory skills.

4. What should T&C supervision look like?

Supervision is likely to include a blend of different measures which include:

  • observations in the workplace
  • monitoring indirect evidence such as KPIs (key performance indicators)
  • file reviews
  • 1-2-1 meetings
  • agreeing CPD and activities which support and help develop staff

Click here for more details.

5. Does everyone need to be supervised the same way?

The short answer is ‘no’. In fact, it would be strange if they were. Different people need different levels of supervision. New advisers, or people who are inexperienced in a particular area, will need more support than more experienced colleagues who are familiar with their roles.

So an experienced adviser may only need supervising at a high level. For example, one client observation a year, quarterly reviews of KPIs, a 10% sample of standard advice files, and perhaps quarterly 1-2-1’s.

Effective T&C supervision, like any effective people management, is about following a process and treating everyone differently based upon their needs. Ask yourself ‘how can I most add value?’ and you shouldn’t go to far wrong.

Click here for more detail on T&C best practice.

I hope this provides some useful insights.

Ian Patterson (Author of the CII’s J07 study text, Supervision in a Regulated Environment)

For details of our in-house supervisor training, email me at info@pstgroup.co.uk

T&C supervision

T&C supervision: giving feedback

T&C supervision requires effective people skills. If you were passing your manager’s office and they said “do you have a moment, I’ve got some feedback for you”, how would you feel?  Not great eh?  That’s probably because people’s experience of feedback is so poor. In many ways it should be a straightforward skill, but clearly from the workshops I’ve run over 25 years, effective feedback is not that common in the workplace. 

This point is reinforced by a survey by the pollsters Gallup. The figures suggest that only 8% of British full-time workers consider themselves to be  ‘engaged at work’. An alarming 73% are classed as ‘not engaged’ and 19% are classed as ‘actively disengaged’.

So this got me thinking. What would Pep Guardiola do in this situation? As he’s probably the best football coach in the world, I’d like to think that he has fantastic people-management skills. When providing T&C supervision, let me try and think like Pep would and explore what these might look like.

Feedback: have a process

Most of you will have heard of the ‘feedback sandwich’ or ‘kiss-kick-kiss’ approaches to providing feedback. They are well-known and some aspects – such as providing a balance of good stuff and bad stuff – should feature within effective feedback. That said, surely there must be a better way of providing feedback than these.

Feedback can be made more effective if a structure is followed.  This can be abridged for simple and straightforward feedback especially where the relationship between the parties is strong.

But if the feedback could be sensitive or the relationship isn’t strong, then here are the four main stages of providing feedback that I’d like to think that Pep would recommend. It could be used in any people-management scenario but for the examples, I’ll work on a typical area for T&C supervision when a supervisor provides feedback to an adviser following an observed client meeting.

A four step approach

  • Step 1 – Confirm the purpose of feedback.  At the start of the feedback session, it would be sensible to just check that both people understand the purpose of the meeting and what is expected from each party. Set the expectation that the meeting will last no more than 5 -10 minutes.

Tip: Ask the adviser what they would like to get from the meeting (or what their agenda is). This encourages them to contribute to the agenda and increases their buy-in. Give it a try, you’ll be surprised just how shocked they are when asked!

  • Step 2 – Encourage the individual to self-assess.  This enables the supervisor to establish not only the adviser’s recollection of events, but also perhaps some understanding behind the reasons for it.  Self-assessment also gives the supervisor something to build their own feedback on, especially if the adviser recognises some negative points.  It is always preferable to build on negative points that have been raised by the individual and to then focus on possible solutions.
Multiple realities
People can see the same thing and draw very different conclusions. For example, have you ever left a meeting where some attendees thought it was very useful whilst others thought it was a waste of time?! 

In other words, don’t just assume that because you saw something, the other person will see it the same way. By asking the individual to self-appraise prior to providing your own observations, you can establish how the other person saw it first.

Tip: Get the adviser talking first. Ask questions like: “what do you think were your three strengths?” and “if you were to do it again, what would you do differently?”. Don’t be afraid to ask follow–up questions to probe. Remember, this is their time to talk – so listen.

  • Step 3 – Provide your observations.  In this stage, the supervisor can provide input into the discussion by stating what they observed.  If the previous stage has gone well, this might simply be a case of agreeing with relevant areas raised by the adviser and ensuring any outstanding important areas are raised. To be effective, this should be specific and preferably refer to actual quotes or examples from what was observed.  It is important to stick to facts and not offer opinions, which may be subjective and open to disagreement. 

Tip: Describe what you heard or saw, e.g. “what I heard you say….” or “when you said xyz, I noticed that the client…”. If you describe rather than judge, you can raise even quite sensitive areas without the adviser necessarily becoming defensive.

  • Step 4 –Plan and agree next steps. Effective feedback isn’t about just having a nice conversation. The positives should be reinforced and any development areas need to be worked on. The adviser should be encouraged to identify not only the development areas that need to be addressed as a priority, but also the potential solutions.  The agreed action needs to be documented along with the time scale and responsibility for future action agreed.

Tip: This is the point where supervisors often go into ‘tell mode’ because the focus is now on finding appropriate solutions. Don’t, unless the adviser is genuinely struggling to know what to do next. Instead, ask questions like “what do you see as the key priority?” and “what’s the best way to take that forward?”.  The adviser will only do any future actions if they buy-in to the process (which is unlikely if they’re told what to do).

Whether you are responsible for T&C supervision, or – like Pep, manage a high-performing team – feedback is just one of those skills that any people-manager needs to get right.

Is it the most important people-manager skill? Probably….

For further details on our supervisor training, click here

Ian Patterson

Ex-Examiner and author of the CII’s AF6, J07 and CF8 study texts.

T&C Supervisor: House of Change

As a senior manager or T&C supervisor, dealing with change is an important part of the job. But why do people react to change in different ways and, as a people manager, what can we do to manage this? These areas will be explored in more detail in this article.

Let’s face it, change is just part of the process in financial services. On the face of it, that’s pretty negative comment as most people mistakenly regard change is a threat. In practice, we’d go backwards without it.

If you are a business owner or a T&C supervisor, one of your key tasks is to help ensure that working with change becomes part of your culture. People need to be willing and able to work through change. In reality, people experience different reactions to change at different times. So everyone who is managing this process needs to be able to recognise these different reactions and respond accordingly.

One way of doing so is sometimes referred to as the house change. When faced with change, people tend to go through four responses to it. These ‘states’ to change can be represented as different rooms in a house. This is represented below.

The four stages of change

The house change helps to develop our understanding of how people deal with change. For this to be successful, people need to work through the rooms or contentment, resistance, exploration and commitment. But as I mentioned, they will react in different ways and at different speeds. Some people, unfortunately, never complete the journey.

The first task is to identify where your people are. So how do you know which room people are in? (See below).

Strategies for managing people through change

Once you recognise where each individual is, the next step is to adapt your approach to help them move through the rooms from contentment through resistance, exploration and on to commitment. Here are some brief ideas on the actions a T&C supervisor could take.

For someone who is cosily tucked away in the room of contentment, it’s important to create awareness. Describe the problem and the reasons for the change. The key focus is that the ‘status quo’ will or must change and describe why.  At this stage, there’s no point talking about the benefits of changing because someone in this room doesn’t yet accept that there will be any change. The individual has to accept that change will affect them in some way before they will move on.  Provide information, acknowledge that is normal to have some concerns and treat them with respect. Give them time to think about the position but recognised that their views may need to be confronted.

Once in the room of resistance, there is an acknowledgement that they can’t ignore change. But they’re far from having bought into it or decided to change anything. Be clear about the reasons for their resistance and allow them to let off steam. Discuss the position regularly and continue to reassure them that some people will find it difficult to change. Identify some quick wins, encourage, and focus on the positive side of change.

Offering coaching is unlikely to succeed in these two rooms as the need, first and foremost, is to change the individual’s mindset. As a minimum, they need to accept the change will happen and that it will have an impact on them. Without this, they may never move on and performance management – not development – may be required.

In the room of exploration people looking to get to grips with the change. Build on the quick wins, reward successes and encourage the sharing views on how improvements can be made. Offer reassurance, support and provide regular development and guidance where required. Work on a ‘one step at a time’ basis and keep things simple.

As people become more comfortable and familiar with the change, people will move into the room of commitment. By now, the benefits of the change should be more obvious. Measure progress and demonstrate business benefits. Provide support and development (but in a less directive way). In this room, identify longer term goals and continue to provide positive reinforcement. Don’t ignore these people because they may still slip back into the other rooms, especially if the change has not yet become ‘business as usual’, or they are left to their own devices.

These final two rooms are on the right hand side of the house. People in these rooms usually recognise the need to refresh or develop their skills and are generally positive about appropriate coaching, support and development from a T&C supervisor.

Going forward

The house of change provides a simple representation of the stages people typically go through when faced with change. It is also important to remember that people will go through these rooms at different speeds so just because you are in the room of commitment, doesn’t mean that everyone else will be.

If you want to know more about our services for T&C supervisors, click here.

Interesting article on dealing with change. Click here

If you want to know more about SM&CR, click here.

Remember, identify which room people are in and then determine how to tailor your approach. At a time when change is increasing regarded as the norm is – not the exception – there should be plenty of chances arriving shortly to practice this.

Ian Patterson

Author of the Chartered Insurance Institute’s J07 study text (Supervision in a Regulated Environment) and AF6 (Senior Management and Supervision)

inclusive financial planning

FCA Supervisor training

This blog looks at how effective FCA Supervisor training can help your business. This isn’t a topic that excites many people – but it should! If you want to get the best out of your people and your business, then read on. This is something you need to get right.

Client best interests

The FCA had planned to review the post-RDR advice process in 2020 (although COVID and Brexit and a few other things have got in the way).  This is all about evidencing whether the FCA’s objectives have been met and identifying any gaps that are still work in progress.  To date, comments from the FCA have been largely supportive of the changes introduced by RDR. But as ever, regulation continues to evolve its thinking.

To date, the FCA has shown little appetite to operate as a ‘price regulator’. It has the power to impose a price cap but, with a few exceptions, it’s chosen largely not to do so. That said, expressions such as “costs” and “value for money” are increasingly being used by the FCA.  Importantly, it has indicated that costs will also form part of next year’s post-RDR review.

And it’s not just the regulator. Many advisory firms will also have first hand experience of clients who query what their services cost them. Perhaps MiFID has contributed to this or maybe some clients are just becoming more curious about how businesses earn their fees.

Either way, the writing appears to be on the wall.  Some fund managers have reduced their costs whilst advice charges appear, overall, to have steadily risen across the market over the last few years.  Advice firms may come under pressure to reduce their fees, offer clients more, or become better at demonstrating the value of what they provide to clients.  Most businesses would probably prefer the latter, but how?

Effective supervisor training

There are a number of ways to communicate ‘value’ to a client. In this article, I’ll focus on the role that supervision can play. Forget about just giving a ‘tick in the box’, I mean proper effective supervision. This starts with having meaningful processes and documentation as part of a T&C scheme.

Many firms I work with use documentation that  first saw the light of day 10 or 20 years ago. It might have moved on a little – the odd tweak here or there – but the trained eye can still spot bits that were first introduced by the PIA!  For example, it hasn’t been a regulatory requirement for retail investment advisers to hand over a business card to new clients for over 10 years now. So why do I still often see this as a mandatory area that advisers are expected to demonstrate? A clearer focus on what is actually relevant for a business would be beneficial.

Let me give you another example. Does the observation aid you use focus on monitoring the process that the adviser follows, or the experience the client receives? There’s probably a 99% chance it’s the former. In reality, most observation forms set out the process the adviser must follow so that the FCA Conduct of Business rules can be evidenced. This is very understandable from a compliance point of view, but it doesn’t help to embed the relationship-focused adviser skills that clients increasingly expect.

Supervision can only add value if:

  1. The tools we use, i.e. observation aids, are fit for purpose and reflect what we are trying to achieve, and
  2.  Our people managers (or supervisors) are able to use them skilfully.

It’s all about the relationship

So to summarise, many firms use a T&C observation form that is out of date and is little more than a compliance check list.  I started this article by suggesting that ‘value for money’ will come under greater scrutiny from both the FCA and clients who increasingly expect more. The question is whether our processes (such as observation aids) and our supervisors are up to the task of delivering what the client will increasingly expect from us in the future. From what I see, the profession does provide a great service to clients; its a matter of how much the client values and recognises this. The key element of this is the relationship the adviser has with the client.

Developing the relationship skills of our client-facing staff should be a business priority. How we communicate the value we provide should be a priority. Developing the skills of our supervisors should be a priority. If we do this, ‘cost’ becomes less of an issue because our value to our clients is clear for all to see.

Click here to access a 21st Century T&C coaching tool

Click here for details of our in-house supervisor training

Click here for the CityWire report


IDD and T&C

To those people who provide advice on general insurance products such as critical illness, life assurance and insurance-based investment products, the forthcoming changes to T&C requirements are something that you need to be aware of.

From the Insurance Mediation Directive (IMD) to the Insurance Distribution Directive (IDD)

Acronyms abound! The IMD will be replaced by the IDD from 1st October 2018. This introduces an updated EU-wide ‘level playing field’ for insurance distribution. This applies to all regulated firms: insurers, aggregators and importantly, anyone who provides advice on ‘insurance’.

In simple terms, ‘insurance’ is anything that is covered under the FCA ICOBS rules. As I mentioned earlier, this includes the likes of critical illness, term, mortgage protection, and income protection insurance. Any retail investment adviser who advises on protection from time to time, will also fall under these rules.

What are the changes?

The IDD introduces a number changes covering disclosure requirements, inducements, advised and non-advised sale standards and complaints. These extend the current ICOBS requirements.  They also introduce changes to the current T&C regime: anyone who advises on insurance products will need to meet them.

T&C changes

Under IDD, all staff involved in insurance distribution must have the appropriate knowledge and ability to perform their duties.  This is, of course, something that we are all familiar with within financial services. Note that this says all staff so this includes those who are already subject to T&C requirements because they provide advice, and others who aren’t currently covered by T&C because they don’t. This will also impact on those who supervise those that provide advice on insurance.

Specifically, the IDD requires the completion of at least 15 hours of relevant CPD.  This can be structured or unstructured.

For those in Financial Services, three specific areas must be covered by the CPD;
1. the insurance market, laws, new products, taxation and state benefits;
2. claims handling, complaints handling, assessing customer needs, appropriate financial competency; and
3. business ethics standards/conflict of interest management.

In each area, the CPD content should cover generic core knowledge, product-specific knowledge, and terms and conditions.

There has been relatively little coverage of this topic.  For a link to what the CII offer via their Insurance Assess site, click here.

What are the implications?

  1. Anyone who is already required to complete 35 hours of CPD will  need to ensure that part of this time (i.e. not in addition) is devoted to meeting the new IDD requirements.  This would apply to CF30 investment advisers, mortgage advisers and any qualified member of the CII that are involved in the distribution of insurance.
  2. The IDD requirements are there to ensure a minimum level of competence. Staff who are affected by these requirements should be able to demonstrate they are IDD competent no later than the 1st October 2018. 
  3. The supervisors of those that distribute insurance will also need to undertake appropriate CPD to meets the IDD requirements.
  4. Anyone who just advises on insurance products may have to complete 15 hours CPD as a minimum for the first time under T&C rules.
  5. T&C procedures need to be amended and there needs to be appropriate oversight of the changes.
  6. Record keeping requirements must be amended so they demonstrate that these requirements have been met.

Click here for details of our T&C services

Ian Patterson

12th September 2018

Supervising financial advisers

Supervising financial advisers- recording client meetings

This week, the FCA published its policy statement on the forthcoming Markets in Financial Instruments Directive II (or MiFID II) requirements. These come into force on the 3rd January 2018 and may have a profound impact on some regulated firms.  The details around what I’m talking about here are to be found in section 19 of the policy statement. It is clear that they will potentially have a profound impact on supervising financial advisers.

The FCA’s view

Although it will introduce a wide range of changes, the change that is creating much of a stir at the moment is the recording of client conversations. When I say this, the rules refer to telephone conversations and not face-to face conversations. We’re also only talking about conversations with clients that include giving the client advice.

As an alternative to this, firms that are affected by this will be able to write ‘analogous notes’. Really?! The document makes this clear that these should not only capture the substantive points of any conversation such as the time and date, and who initiated the call. They should also include the ‘context and colour to the decision made by the client’.  It’s clear that record keeping will have to go well beyond just recording the facts, but also the client’s motives.

Supervising financial advisers – best practice

So what has recording client meetings got to do with supervising financial advisers? One of the trends of the last few years has been the growing number of adviser firms who already record client meetings. And when I say this, I mean face-to-face meetings and not just telephone discussions. For every firm that does this, there are probably another nine who would look at this with a sense of dread. You can understand some of the concerns; client’s won’t like it, it will encourage complaints, what about the costs?

On the other hand, if you talk to some of these firms, they find the vast majority of clients agree to the recording. In practice, most clients seem to be comfortable with the process. Maybe it gives them reassurance.  Whatever the reason, if it doesn’t impact on the client experience, then maybe it’s worth considering. And when I say this, I mean it’s worth considering for supervising financial advisers’ face-to-face meetings. This goes beyond what the FCA is proposing to introduce.

What’s in it for the authorised firm?

  • There are so many low-cost electronic recording and transcription systems available now, the extra cost should be minimal. Some firms even use transcriptions as part of their formal documentation which demonstrates ‘know your customer’.
  • Clients seem to like it, if it is presented positively.
  • It should minimise spurious complaints, you know the “you said, I said” type of situation. I know several of the firms who have already adopted this have also secured substantial savings on their PI insurance (or at least had their excess reduced).
  •  From a T&C point of view, it’s a godsend when supervising advisers. Just think, as a supervisor you can dip into any client meeting and listen to it. There’s no danger that the adviser will be on their best behaviour just because you are sitting in the room observing them. You don’t have to go through the time consuming process of observing them. You can just focus on the parts of the recording that interest you the most, e.g. exploring the client’s objectives and concerns, or the adviser’s explanation of a particular product or service.

The FCA might want to make this approach compulsory, but there are some firms who already go well beyond the FCA requirements – and do so because they believe it’s good for their business. Food for thought.

FCA supervisor training

Supervisor training and advice suitability

A key question for any T&C supervisor is this: do our advisers provide suitable advice to our clients?  Most supervisors would say that they do – but  if your advisers weren’t providing suitable advice, how would you know? One way to do so is to observe them and do some supervisor training.

In my world, the role of the T&C supervisor is twofold:

  1. to ensure that minimum regulatory standards are met, and
  2.  to improve either the quality or quantity of advice provided to clients.

FCA – Assessing suitability review – May 2017

To achieve these two aims, we need to be clear about the FCA expects from us. In their review published in May 2017 (click here for the full report), they gave a clear steer about what is working, and what isn’t.  Either way, if you act as a supervisor, this is essential reading.

First the good news. 91.3% of investment advice was found to be suitable. This is a huge increase on previous reviews and a credit to the increasing standards we see across the profession. It’s still not perfect, but it’s pretty good.

The less good news is that 4.3% of advice was deemed ‘unsuitable’. There were also some concerns around disclosure. The FCA defined this as being the firm’s initial disclosure, the product disclosure and the disclosure in the suitability report.  Here, 41.7% of cases showed that the FCA COBS disclosure requirements hadn’t been met.

The main areas to be addressed by supervisor training relate to the disclosure of fees – both initial and ongoing fees. Then there were fee-charging structures that are so broad, they are almost meaningless. Firms that charge advice on an hourly basis were also failing to provide an overall indicative cost for it.

Supervisor training – what to focus on

  1. The explanation of costs is clearly still an issue across regulated firms. In the work I do, I also see advisers who always offer a discount on the standard fee tariff (did you know that these should be recorded on an exception report?). I also see advisers who do not believe that the service they provide is worth what they are asking the client to pay.
  2. Although the FCA review gives some reassurance as to the suitability of advice, i wonder if we are just getting better than we were at giving a product solution, and then justifying it to the client.  If i’m right, then many advisers are still focusing too much on product solutions, and too little on first establishing the needs of the client. This sounds like I’m being pedantic but to me, it’s quite significant. If we are to provide suitable advice, we need first to have a clear idea about what is really important to the client, what their priorities are, what they would like, when and how much, and what could stop them form achieving this? If advisers in your business are talking about investments, pensions or whatever within the first few minutes of meeting with a client, then their focus is very much on solutions and not on the client’s needs.


The points I’ve just made are all likely to have a negative impact on one or more of the following: the client relationship, the quality of the information collected, the adviser’s ability to demonstrate how the advice meets the client’s needs, and/or the range of client priorities that are identified. At a time when the FCA is talking more about advisers providing ‘value for money’, these are all important factors.

So to finish. If we go back to the FCA findings, we’re clearly getting better at documenting the advice our financial advisers give. The most effective way to counter this is supervisor training that focuses on observing advisers to monitor and develop the broader areas we’ve discussed. A more ‘client-first’ approach is the foundation to any long-term effective and mutually beneficial client relationship.