Moral redundancy in financial consultancy

[July 13 2012]

If businesses of the world were to be categorized into taxonomies of the animal kingdom, there is a new breed of financial consultancy which would surely rank with the mosquitoes. Parasitic in nature, encounters with these companies are often merely irritating, but just as malaria-carrying culicids can prove fatal to your health, dealings with these companies can occasionally have a similar effect on your finances.

These Financial Consultancies seek to sell investment packages to high earners living all over the world, preferably rich English-speaking Expats. Their employees are poorly qualified to advise on financial matters, and try to aggressively persuade potential clients to make badly thought through investments. In their hunt for commission, they damage the reputation of legitimate financial advisors and ultimately put themselves above the customer. 

The word “consultancy” would suggest that people actively seek out their advise and the services they supply. In reality new customers are not forthcoming and need to be sought out. This is most often achieved by trawling through social networking sites and harvesting the names of wealthy-seeming locals or British and American expats with attractive liquid assets.

Following this, a frenzy of cold calling begins in which men and women of assumed high net worth are harassed at their places of work. When the victim of a call politely expresses their lack of interest the caller is prepared with a list of responses to any objections to the pitch. Objections may be perfectly valid, but employees are in effect told that “the customer is always wrong”. If a “lead” asks where their contact details were obtained, they will be fed the lie that their name was willingly offered up by a friend or colleague. Callers will try their best to keep a potential client on the phone until a meeting with a consultant can be made.

The motivation to arrange these meetings is high, because the only way anybody in the company sees a commission is if the consultant meets with a client and manages to close a deal, relieving him of large quantities of money. If necessary, consultants are willing to drive for hours outside of their base city to do this. Ultimately, it does not matter if the product being sold is bad for the individual, and it often is; once the deal has been made, the customer is largely forgotten about. The commission has been taken.

With regard to customer satisfaction, a brief internet search of complaints will furnish you with all you need to know. Searching a company name reveals a constantly updating stream of anger and bile from past clients. Hundreds of testimonials tell disquieting stories of customers losing their pensions as a result of calamitous financial advice.

If you are searching for work there is also a danger they might recruit you. Companies such as these only have an annual employee retention of 10%, meaning they are constantly searching for anything with a pulse to man the phones. The lack of loyalty is unsurprising, given the stress involved in harassing people with no promise of a pay package at the end of it all.

Ultimately, It is important that one is able to recognize the hallmarks of these companies in order to avoid them. Although what they are doing is morally bankrupt, it is not illegal. The only way they can be combatted is through widespread awareness of their ongoing business malpractice.