July 16.
I must take issue with many of the comments of Edward F. Rock (July
10). The world of personal financial planning is one which is complex
and specialised. The correct level of expertise required will normally
be beyond that of an accountant or solicitor. Indeed, many accountancy
and legal firms simply refer their clients to a tried and trusted firm
of financial advisers. Other firms, particularly larger ones, now have
their own financial planning arm which is run by financial advisers.
It is an astonishing generalisation to state that financial advisers
have varying backgrounds ''from joiners and plumbers to used-car
salesmen'' whose ''prime motivation is the sale of insurance services.''
Mr Rock will be aware that there are a large number of highly
reputable and respected financial advisory companies who are committed
to offering quality advice to the corporate and individual markets.
These firms rely largely on a hard-won reputation, and generally
employ experienced professionals of high ethical standards who are
obliged to provide ''best advice'' as defined under the Financial
Services Act, 1986.
Mr Rock asks if financial advisers disclose commissions to clients. He
should familiarise himself with commission disclosure requirements
stated in the Financial Services Act.
It is true to say that the 1986 legislation was introduced to regulate
the financial industry. There are charlatans in every profession.
Indeed, it is no secret that the legal profession has been asked to
''bail out'' clients of unscrupulous legal advisers. This, however, does
not colour my regard for the legal profession.
Many financial advisers agree that fees would be a more acceptable
method of remuneration. Bearing in mind that the present
commission-based advice is non-obligatory, many advisers would actually
prefer to work for fees rather than provide advice which may not be
taken up, or which may even not be remunerative. In such instances the
advice is certainly free, and I wonder if Mr Rock would be prepared to
work on such a basis. Commissions, in the present real world, are a fact
of life. Until legislation dictates otherwise, few people will pay fees
for advice which can be obtained from a competitor with no fee.
The financial services industry is often criticised. Criticism when
constructive and based on fact is helpful both to the consumer and the
industry. Criticism based on venomous and biased personal opinion is
unwanted.
Robin R. Clements,
15 Alloway Gardens,
Earnock,
Hamilton.
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