These two points are made starkly evident by two of the examples of bad behaviour given by the Financial Conduct authority and, I would argue it is not coincidental that they both come from the area of assessment of risk appetite.
Underlining the first point, the FCA outlined one example where a firm had elderly customers, including one over 90 years’ old, who, it said: “were documented as having a medium risk appetite and 20 year investment horizon”.
The FCA goes on to say, “The firm did not appear to have sense checked this information. These customers’ investment portfolios consisted mainly of direct holdings in equities, which may not have been suitable.”
At best this is just poor client record maintenance, at worst, it is indicative of a complete misunderstanding of what the client needed. Either way, it is a standard of client service that needs to be radically improved if the firm in question is going to manage to get new clients to replace the elderly ones to whom it is clearly not paying sufficient attention – especially in an era where the cost and value of advice is being questioned, younger clients demand more for less.
