Firstly let me say, what I’m going to be telling you is 100% factual, it is not a rant. And it is very, very important you know about it.
It wasn’t all that long ago when the banks could do little wrong… no one minded they were making big profits because they were supporting us through the money they loaned out and advice they gave. But in the last few years we’ve had a glimpse of how much things have changed. I’m going to show you how the banks are now thinking …. and as we all know, thoughts drive actions.
Have you heard of the legal case Crestsign v NatWest that was decided just last month? Not many have but it’s a decision that demonstrates perfectly why the banks have surrendered their ‘trusted adviser status’. If you have trouble sleeping, follow THIS LINK to download the 46 page judgement. If you want a shorter summary, go HERE. Here’s my summary…
This was a case about a complicated product sold by a bank to a family business, which cost it a lot of money. The customer argued the bank had given them negligent advice. The bank argued they had given no advice nor made any recommendations but had merely presented options…and in any event their terms contained an exclusion clause which said that no advisory relationship existed. The judge decided that the bank had indeed made a recommendation… but the outcome of the case hinged on the written terms, which said the customer was on their own, they weren’t being given advice. The customer did not win his argument that those terms were unfair so he lost his case, the bank wasn’t liable.
What do we learn from this?
… What anyone outside of a bank considers to be advice from a bank isn’t really advice. You’d be a fool to rely on anything they tell you.
So where does that leave the banks?
… With all the credibility of a used car salesman.
Where does that leave banks’ customers?
… In need of reliable, top quality, independent professional advice from someone they can trust.
This gives accountants, financial advisers, even lawyers a great opportunity to step into the space of ‘trusted adviser’ to potential new clients and to get much closer to existing clients who up to now have been ‘a little distant’, who previously relied on their friendly local bank manager.
So how do you do it?
Advisers are already under huge financial and time pressure. I believe the only way they will ever be able to step into the breach will be by collaborating closely with others in complementary fields – otherwise how can any individual or firm ever hope to match the banks’ resources?
This is a vision that I have had for a good while now within the professions, I woke up to this possibility a good while ago after reading a book on collaboration in IT ‘Wikinomics, how mass collaboration changes everything”. I asked myself why when collaboration in IT can have such a massive impact, can’t it be done in other areas like finance or general business support?
Look at it in this way…huge international businesses like Microsoft still have a big influence on technology, but most of the real technological innovation and results in terms of the impact on people’s lives comes from the efforts of much smaller firms using free/open source software given to them by highly principled, skilled members of the gnu hack community. Just look on your computer or mobile right now, you will find numerous examples of what I am talking about – and these are not inconsequential things, it is they which make your life the way it is today.
My Business Resuscitation work is my own personal effort to inhabit the collaborative, highly principled trusted adviser space. So what are you going to do to inhabit that space? And if you choose not to inhabit it, who will do so for your distanced clients, how are you going to attract quality, appreciative, new clients to you in what may be a reducing market?
You see the world is changing – or I should say it’s changed – and it’s now time for the professions – accountants and others involved in finance, and yes even you lawyers – to step into the breach for all of their actual clients, not just the few paying higher fees, and also for potential new clients.
But here’s a word of warning…I’m seeing a growing number of accountants and lawyers telling people they walk the journey with their clients as ‘business advisers’. But they do nothing to back it up – it’s just sales hype. In fact get some of my better leads from the clients of such firms, they come to me direct with two things: major problems and a willingness to pay my bill. You see they were attracted to that particular firm because they needed more than a stereotypical reactive service, yet when they asked for it they found it had never existed. And because aggrieved clients tell on average 10 other people, it gives the competition an opportunity to differentiate themselves and attract appreciative, ‘adviser fee friendly’ clients.
So what’s your plan for taking advantage of the banks’ and your over-hyped competitors’ own goals?
Licensed insolvency practitioner, chartered accountant and trusted adviser
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Tel: 01902 672323