I cannot really imagine that this is going to be the end-point for state of the art thinking on financial services. No, I’ll go further. In a few years’ time we shall look back on the academic and regulatory fixation with the ‘ideal’ as an amusing aberration.

To illustrate:
My doctor doesn’t start with the ideal. He doesn’t look at me and say, ‘You know, physically, your resting heart rate should be under 60, you should be able to run a marathon in about 3 hours, do 100 metres in about 10 seconds, have around 10% body fat, more hair on top, and…’ well, you get the idea.

They don’t do this for several simple reasons. It is unrealistic. It would scare you off in the direction of a more understanding practice. It would also be a poor use of time and resources. You might not want to be like that. Most health professionals like to ask client what problems they want to work on first and then set goals after that. They are allowed to make an assessment based on you and the symptoms you present.

Financial services thinkers the world over have some difficulty with this building-block approach. Instead they prefer to ask for an ‘ideal’ as the starting point. But what is ideal? There is no commonly agreed approach – at least for insurance there isn’t. We stray back in to the realms of a ‘reasonable ideal’ – surely a contradiction in terms itself, underlining that the ‘ideal’ has already been abandoned, only we aren’t supposed to admit that. The ideal may fuel underinsurance: faced with the impossibly complicated and expensive ideal some clients may simply be walking away. No one has the ideal – think about your friends, how many have the ‘ideal’ house?

If we genuinely put the client first then that is where we must start. The ‘ideal’ assumes that the spend on, say, insurance, matches a model of cover that is, in reality, the ideal sale. The ‘ideal’ assumes inconvenient truths like budget and client preference simply did not exist. In that way the ‘ideal’ runs counter to Code standard one. It also sets up the adviser as a kind of know-it-all in tension with the client, when instead they should be on the same side, helping the client select realistic financial goals and navigate their way towards them. The ‘ideal’ should be treated in the same way ‘idealistic’ is often meant as a criticism, not as a compliment, in conversation.