Financial Services Must Change its Image, Starting with Ending the Practice of Cold Calling

Picture the scene. You’re sitting in your office at five o’clock in the afternoon, rushing to meet a deadline, and the phone rings. Just for a second, you consider letting it go on to answer phone. But you don’t. It might just be important. You pick up the receiver and the voice on the other end starts trying to sell you financial advice.

By David Pugh, General Manager, The Fry Group

 

Make no mistake: cold calling is irritating and, in this day and age, potentially damaging to the reputation of the financial advisory industry as a whole.

 

It’s not only annoying and counterproductive; we think it’s bad for business. A survey by the UK’s Citizens Advice found that 92 percent of people do not trust firms that call them out of the blue — financial services firms were singled out for criticism. At its worst, cold calling opens the door for exploitation of the vulnerable in society. Two in five scams reported to Citizens Advice come from cold calling. Over a third are offering financial and professional services.

 

That’s why I welcomed the introduction in Singapore of “Do Not Call” rules in January. In its first few months, nearly 800,000 telephone numbers have been registered with the DNC Registry and thousands have complained about cold calling. Offenders face a cash fine.

 

The UK is adopting an even more robust approach. Earlier this month, a claims management firm was fined £850,000 after making a staggering six million calls in the space of six months under tough new data protection laws.

 

In Australia, an official at the regulator, ASIC, said publicly that “reputable” financial services professionals do not generate leads via cold calls.

 

For some reason, the message isn’t getting through. Financial advice firms in Singapore are still getting contact details from third parties and calling them directly. Worse, anecdotally, cold-calling is moving on-line, with financial advisors stalking prospects on social media websites such as LinkedIn.

 

There is something you can do about cold calling. Firstly, take your financial future seriously. You probably wouldn’t buy a car or a home from someone who has cold-called you. Financial advice shouldn’t be any different. Do your due diligence: check their qualifications, look for a solid track record, seek referrals. Getting the right financial advice is one of the most important decisions you will ever make.

 

Secondly, you can register your numbers with the DNC registry quite easily. By law, unless you have an existing relationship, advice firms should remove your phone details from their call sheets once you have registered.

 

But I don’t think the answer lies solely with the customer. I believe it’s time the industry moved away from cold calling altogether, whether people register their phone numbers or not. Without an end to cold calling for financial services, people remain at risk of losing some of their pension or paying upfront fees for services that aren’t in their best interest.

 

A unified industry response on this practice would send a clear message that, if you are contacted in this way, the advice you will receive is not likely to be in your best interests and the caller is not to be trusted. As an industry, we have a responsibility to protect our clients and potential customers by being the best we can be.

 

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