Financial Advisers must demonastrate the suitability of their advice against standards defined by the FCA.
Regulation has become so intense due to the many examples of poor advice that have occured since regulation began.
Had this not occurred there would be less regulation.
"There is much greater risk by 'not' managing cash deposits than there is by managing them"
As a result, Financial Advisers produce excessive amounts of paperwork to demonstrate the suitability of their advice, but one area that has always been difficult to discount has been: CASH.
One of the most common methods using to discount cash has been the client's Attitude to Risk but in reality, this is an irrelevant measure. Would someone with a higher Attitude to Risk take a more risky option even though their objectives could be met with a safer and more reliable solution?
"The ONLY reason for someone to take risk-based solution is when their objectives cannot be met by safer options"
The ONLY way safer options can be discounted is to understand the 'Real Value' of those options and to demonstrate, with a report on file, that they cannot achieve the specified objectives of the client.
Therefore, whenever advice is provided without providing full disclosure of all options, the level of risk associated with the advice increases.
The vast majority of advice processes fail to disclose the full value of cash held on deposit. This weakens the quality of the client file and increases the level of risk carried by the Financial Adviser.