Chris Davies, director at Consultancy Engage Partnership, has written what he says is the first book about the retail distribution review and the industry’s battle for clients’ hearts and minds. To celebrate the launch of Winning Client Trust, we have five copies of the book to give away to Money Marketing readers.

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That a former leader’s conduct has been questioned has shaken McKinsey’s 1,300 partners. They are right to be shocked as the scandal goes to the heart of the consultancy’s identity and reputation, writes John Gapper

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McKinsey model springs a leak

That a former leader’s conduct has been questioned has shaken McKinsey’s 1,300 partners.

Continue reading here:
McKinsey model springs a leak

Internal information from at least seven clients of the consultancy was allegedly leaked to Raj Rajaratnam, co-founder of the Galleon hedge fund, court filings show

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Further leaks from McKinsey alleged

How to Choose a Compliance Consultant

(Acknowledgements to Alan Weiss, www.summitconsulting.com)

 Every financial services business occasionally needs outside help. Even well-run giants such as RBS, Lloyds, Aviva, Barclaycard, and many other firms deliberately choose to bring in compliance consultants on a regular basis. For smaller businesses, an outside consultant can offer the following advantages:

• ? Objective advice, not geared toward political advancement or promotion
• ? Frame of reference and best practices from other clients
• ? Models and methodology to gain results more quickly than internal trial and error
• ? Permanent transfer of skills to internal people The problem, however, is that those external consultancies can create as many problems as they solve. (One definition of a consultant: someone who comes to fix a problem and remains to become a part of it.)

These include:

• ? Threatening employees by the mere presence of an “outsider”
•  ? Reliance on “off-the-shelf” fixed methods which don’t fit the current client very well
•  ? Lack of sensitivity to the client’s business, culture, and environment (a financial adviser practice is not run the same way as an accountancy practice)
• ? Solutions that worked for large organisations cannot always be simply scaled down
• ? “Ideal” solutions not really practical for the client’s business and have limited or no real value

I’ve been in consulting since 2000 and, to my astonishment, I find currently that about 50% of those calling themselves “consultants” don’t really know what they’re doing, but what is worse is that almost 90% of those buying consulting services don’t know how to tell the difference! To remedy that, here is a primer on how to hire the best possible consultant for your needs:

Referrals:, Ask business colleagues you trust for names of people they have used for similar needs, and find out specifically what the results were. (Don’t ask the consultant for references, because they will be hand-selected, wonderful, and meaningless.)

Credentials: Has the consultant ever worked in an adviser capacity? Have they ever held down a conventional job? What are their academic compliance qualifications? How many similar IFAs or other organisations have been clients? Every consultant has to start somewhere, but I’d strongly advise that their start not be with you! (They should start in a larger consulting firm, and should also have “real world” experience.)

Chemistry: Meet with the prospective consultant several times before hiring. Ask yourself if you see the other person as a peer and a potential partner. If you don’t respect them, or see them as merely a vendor or subordinate, don’t hire them. You don’t need another employee; you need a business partner for a particular issue.

Demeanour: The individual should look professional and act accordingly. (Don’t worry if you get their voice mail because good consultants should be busy. The key is, do they get back to you promptly?) Their language should be clear and articulate. At meals, they should know which silverware to use and not spill their soup on your lap.

Proposal: The consultant should provide you with a proposal that is based on achieving clear business outcomes, and not on merely delivering technology or methodology. In other words, running focus groups or delivering training programs is simply a task; improving sales results or enhancing customer satisfaction is a business outcome. Achieving the former and not the latter is worthless.

Fees: The consultant should provide a fixed fee for the project. Hourly rates are not as effective, because there is a “meter running” as long as the consultant is working, and there is a built in conflict of interest, since the longer the project takes, the more the consultant is paid. Insist on a fixed fee or at least a cap on the hours.

A good consultant frames an issue quickly but doesn’t suggest solutions too quickly, because he or she realises that they don’t know what they don’t know until they begin to gather more data.

A good consultant will not promise the moon and the stars, and will never base as approach on tests or instruments that are purchased for a few pounds from other companies. (You get what you pay for.)

A good consultant is someone you’ll hate to see go when the project ends on time, and who you’ll want to invite back at the first appropriate new challenge.

Every business reaches a point where an outside opinion or a breath of fresh air is required. But just because someone lives over 100 miles from home and carrying a briefcase doesn’t mean he is a consultant. Use the criteria above and, most importantly, use your judgment: Is this someone you would trust with your wallet?

 Lee Werrell holds Chartered Members status with the CISI, is a Fellow of the Institute of Sales & Marketing Management and a member of the Association of Compliance Consultant, the Business Continuity Institute and holds the Certificate in Personal Financial Planning (Cert PFS). CEI Compliance works on an alternative basis by collaboration and does not charge per hour, day or week. Call CEI on 0800 689 9 689 to make your first appointment.

Typically consultants will use the phrase of “under promise and over deliver”. This would normally infer that the tasks they have taken on are well within their comfort zone and they can dupe their clients into believing that there is more to the job at hand than there really is; this is then followed with as speedy resolution which makes the consultant supposedly look good.

The trouble with operating in this way has many facets and they are all negative.

Firstly, it assumes the client is too stupid to understand what is involved in the work. The therefore creates an air of superiority (and thus arrogance) which feeds the inflated consultant ego everytime the client “falls” for the under promised level of service.

Secondly, the resultant outcome being achieved quickly or with additional elements “bolted-on” to “add value” fools no one, and the client will suspect you do not understand the business area you are working, or you do not understand the company processes, and cannot estimate the level of work, time, resource requirement or impact.

Working in this way encourages the client to adopt a “as they always do things 20% quicker than they say they will do them, we will knock their price down by 20% if we use them again. This turns the consultant into a contractor, a bum on a seat for so many hours a day/week, running through a process or procedure that the client is short on resource for.

The consultant, acting within their sphere of knowledge, never learns anything, they never push the envelope of skills or understanding, they treat the client with contempt (they fell for the under-promise, didn’t they?) and any respect to the client is lost.

With these main elements to the relationship severely bruised, if not broken, what future is their on a consultancy basis, a collaborative foundation or the chances of acting as peers on projects with joint responsibility? The answer is obvious, we then perpetuate the syndrome of the client is always looking for cheap cheap cheap and the consultant is always trying to hoodwink the client and create more work.

CEI compliance will always work on a collaborative basis with long term UK financial services clients, but also understand that in some situations a cost per unit or period is more favourable, where a relationship isn’t easily forged due to the short timescale set by others. We do not compromise on quality of consultant or resulting outcomes, to satisfy a perceived price or value set by others, we stand alone in costings at a fair level for exemplary service. Please call us on 0800 689 9 689 to see if we can help your situation and improve either your efficiency, strategy or general compliance related processes. Let us be your growth partner.

CEI Compliance has a new FREEFONE number in the UK.

CEI Launched their new FREEFONE Number today – 0800 689 9 689

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That is over 3 times last year! Figures released by Wolters Kluwer Financial Services under the Freedom of Information Act found that the FSA has already issued fines worth £941,500 directed at IFAs, during the first half of 2010, which is a significant increase from the £236,676 that IFAs coughed up to the City regulator in 2009.

Last year, IFA fines amounted to just 0.7 per cent of the total penalties. But this has now spiked to 1.5 per cent of total issued in 2010 so far.

Mary Stevens, regulatory editorial UK manger from Wolters Kluwer Financial Services, said: “Even though we are only part way through 2010 the fines percentage is well over double last years’ final total reflecting the FSA’s increased pressure on IFAs as it gears up for the retail distribution review implementation.”

Lee Werrell, CEO of CEI Compliance Consultancy said “The FSA fines are not always a measure of findings as many investigations take a long time to materialise or fizzle out. There is no doubt that S166 activity is increasing, and that is derived from many reasons. Many distributors still stick their head in the sand and pretend that it won’t happen to them but they need to be aware that S166 actions can cost them well into 6 figures for a modest organisation of only a few advisers. Prevention is always cheaper than cure.”

CEI have recently produced a Guide for Senior Managers on S166 Reports and this can be downloaded free from HERE.

There is much discussion and conjecture about the final look of the financial services landscape post-Retail Distribution Review. There is a sector within the RDR proposals that may have been overlooked or dumbed down; the Recognised Professional Body (RPB) advisers.

 Many of these practices, attached to solicitors and accountants’ practices are often run by themselves and whilst overseen by a partner, they may not be fully aware of the changes planned and the FSA regulatory compliance requirements that are impacted by these changes.

In CP10/14 Delivering the RDR: Professionalism, the FSA states that it is worth noting that existing professional bodies operating in the retail investment advice sector and elsewhere, typically operate sanctioning regimes for their members. For current retail investment adviser professional bodies, these disciplinary regimes are not assessing compliance with the FSA’s regulatory requirements, but with the professional body’s own standards.

 By implementing the new “Statement of Professional Standing” (SPS) by accredited bodies for advisers in the future, it would be reasonable that these bodies will have disciplinary measures that involve a range of sanctions. Included in this range would be the withdrawal of the SPS and notification to their firm that this is the case. Under Principle 11, the firm would then be obliged to inform the FSA as this would impact on the rules for Approved Persons under FIT.

Email rdr@FSAregulatoryCompliance.co.uk to get your firm compliant.

 The FSA are introducing a requirement for firms to ensure that their advisers provide documentary evidence of verification. They believe that the potential threat of the body withdrawing such evidence would be an effective deterrent against non-compliance with requirements. This will only be effective if the RPBs are up to speed with the RDR implementations and this element does not get overlooked or considered irrelevant. There is a risk that the FSA rules are ignored as RPBs consider their own professional body as the overseers instead of their own firm’s responsibility.

 FSA regulatory compliance requirements are in a huge state of change, like white water rapids, and it is always best to ensure you have grasped the entire impact on your distribution model whether an RPB, IFA, stockbroker or Friendly Society. Contact CEI Compliance for a FSA Regulatory Compliance Health-check and evaluation before you are put under the spotlight. Call 07092 289901 or email rdr@ceicompliance.co.uk TODAY!

The link to CP10/14 is here