Curly Questions
I recently received an email from a client asking whether any of the investments that I have her in have any inbuilt trail commissions. Over the last few years, any time I have received a question from a client I usually have an initial moment of panic, “How do I answer that?”, however I have recently come to realise that this is a reaction that comes from previous experiences and not a reflection of the advice I am giving today.
With this particular question, as soon as I asked myself “How do I answer that?” the answer came to me very quickly AND I was really happy with the answer that I was able to give: “As of 1st July 2013, no new products can be purchased that include a trailing commission. Having said that, in the 10 years that I have been advising, I have never recommended or placed a client in to a product that included a trailing commission, I always opted to choose products like they are today, where you can add an adviser service fee, but it must be negotiated with and signed off on by the client. It can also be switched off at any time, which you cannot do with a trailing commission.
I then got to thinking, why do I initially have such a negative reaction to the question? It is because in previous times I have not been comfortable with the answers to these questions, however since starting my own Financial Planning Business 2 ½ years ago, I have never been unhappy with the answers to the “curly questions”. This is the fundamental reason why I started my own practice.
My belief is “Never give advice to a client that you would not give to your Grandmother.” My new philosophy after this most recent revelation is “Never do anything that you are unable or unwilling to explain later.”