Any commercial proposition that is based upon the sale of a financial product in order to earn money is based upon a principle that has a Conflict of Interest
at its core.
The financial advice process is fundamentally based upon this Conflict of Interest and financial advisers have been FORCED
by the REGULATOR
to provide greater disclosure in many areas to demonstrate they are managing this Conflict of Interest:
Pension Transfer – the value of the ceding scheme should be known and understood before value of the transfer
can be demonstrated and the transfer can take place.
Investment Switching – the value and performance of the existing investment should be known and understood before
the value of the new investment portfolio can be demonstrated and the switch can take place.
Re-Mortgaging – the cost of the existing mortgage should be known and understood before the value of the new
mortgage can be demonstrated and the re-mortgage can take place.
Life Assurance Replacement – the cost and protection level of the existing life assurance should be known and
understood before the value of the new life assurance can be demonstrated and the re-mortgage can take place.
Critical Illness Policy Replacement - the cost and protection levels of the existing critical illness policy
should be known and understood before the value of the new critical illness policy can be demonstrated and the re-mortgage can take place.
Investment from Cash - ??????
When clients are not shown the maximum value of their cash an adviser can be accused of not fully informing their client of their options. When an adviser
does not fully inform a client of their options, they could be accused of not managing their conflict of interest.
It can be construed, as it previously has with all of the other examples shown above, that the financial adviser is not providing information so they can better
influence the client to make the decision to undertake the risk-based regulated solution.
This is a weak and ill-informed advice process.
The best way to mitigate this threat is to demonstrate the value of cash to all clients within the advice process.
"A Cash Management proposition clearly enhances the
Conflict of Interest Policy as it demonstrates
clear disclosure of best value from Cash, prior to
money being moved elsewhere."
The value of cash should be demonstrated to EVERY CLIENT to enable the Conflict of Interest Policy to be managed more effectively.