It is common to hear fellow practitioner that says that they make the recommendation while the client ultimately makes the decision. On the surface it sounds true because it is the client that must sign the transaction form; it is the client that signs the cheque. Also it is the client that signs the disclaimer forms which contains all sort of disclaimers and you really wonder why bother to engage a financial adviser. I do not think client makes the decision. Why?

In a professional relationship between the professional and the client, it is always a given fact that the client assumes the professional (1) knows more (2) is competent and (3) will do his or her utmost best to ensure the client’s interests are looked after. The professional person takes years of full time training and learning and yet the client could only afford that few hours and at most days to make an investment decision or an insurance decision. Regardless of how much time the client makes in research, he or she could only do it for maximum a few days or weeks. The client can never bring themselves to the same level of knowledge and competent as the professional. Regardless of how much information that the professional could download on the client, the client can never fully absorbed that much information to make a truly informed decision. Informed decision – to me – is a decision which the client makes after considering all the facts and circumstances of the decision. All? Every professional knows that to know “all” facts and circumstances is impossible. Even the professional cannot claim to be 100% sure that he can make that informed decision. If this is so for the professional, what makes people think that the client can make a truly informed decision? The client therefore will always entrust the recommendation to be made by the professional.

In my dealings with clients, I normally make various proposals. At the end of the day, the client will always ask this question – which is the best route? Or they would ask this – if you were me, which would you choose? The professional adviser must then give his opinion and the client follows that opinion. Is it true that the client makes the decision? No, it is the professional who ultimately holds the key.

There are two cases that occurred recently that shows that the professional is the one who held the key to client’s decision. In the first case is the Lehman Minbond mis-selling. The authority and institutions agreed that the “vulnerable” group of investors should be compensated. In other words, they do agree that there is a segment of the population who cannot be held responsible for their own decision. It was the professional adviser who ultimately holds the key to their decision.

The second example appeared in today’s straits times newspaper. It was a case of a real estate agent and his superior who did not act professionally with their client. The client asked whether was their property being sold the best price, it is the duty of the agent to do the right thing to answer that question truthfully. Apparently the selling price could have been fetched much higher.

A fellow industry practitioner told me that he recommended an investment product to his clients who seem to be quite interested in the product. I told him that in my opinion, this investment strategy is not likely to do well (but in fact has good chance of losing money) this year but instead another strategy is the better one. He agreed with my opinion but he said that clients do not wish to buy the better strategy due to the market’s poor sentiment. Therefore, he has to show something else that is inferior because it is the “client who makes the decision.” I thought about it over tea-break and I come to a conclusion that this should not happen. If the professional would to go ahead and transact something he does not believe in and yet earns a commission out of it, this is not being professional at all. The true professional will not recommend anything else inferior and naturally will least be interested in earning anything from the client. If the client does not want the better product, so be it. The professional is not obligated to transact. In other words, a professional would prefer not to earn anything rather than earning something he or she does not believe in.

There is a huge responsibility that the professional shoulders. Who can check that the professional does the right thing? It is difficult to check as long as there is no obvious regulatory offence. But the professional is not contented being merely fulfilling regulatory requirements. He goes beyond that line. The Conscience is the ultimate judge as to whether that requirement is met. But conscience is a function of upbringing and environmental influences. Thus, the Conscience is ultimately corrupted by external forces. I always tell myself this: whether can I face my Maker one day and give a full but account of what I did.

Some practitioner found me weird in thinking. But this is not weird at all. If the client or prospect is your mother, father or wife, or even yourself, would the professional makes these recommendations? Given two products which seem to meet the needs of the client but one of them gives outrageous commissions while the other give less, which product would the professional recommends? I believe most advisers would recommend the large commission paying one after all both sides “win”. Is it really true? Search your heart and listen to your conscience. There is no free lunch in this world. Ultimately it is the client that pays the commission and ultimately this will be reflected in the returns of the investment.

So fellow practitioners, stop giving excuses and argument, the ultimate test is would you buy this product yourself if you were the client? Can you face your Maker when the day comes?