How to Test your Energy Consultant

By Paul Goodwin, Energy Consultant at LG Energy Group

“Put your client at the heart of everything and then fight for their best interests”. This sounds straightforward and it's definitely one of the reasons why joining LG Energy Group was easy for me.

The thing is, wouldn't any business say this?
When a customer first meets with Mr Slick, the Salesman from the Consultant, I'm sure the customer wants to be championed and I'm damn sure Mr Slick is going to say that's exactly what they do. Does the customer just need to take this for granted or are there ways of testing if what Mr Slick says rings true?

I believe there are...
In my conversations with Energy Consultants across the country, I was always happy to hear "we fight for our customers". However, after a bit of digging, I would tend to leave a bit puzzled. Puzzled because despite saying "customer first", there were things that the Consultant was doing that made me question whether I could trust them, never mind whether a customer should.

The first thing to look out for is how the Consultant is Being Paid?

If a broker genuinely thinks "customer is king", wouldn't they be completely upfront about how much their service was costing?

The problem here is how much the Energy Market reminds me of Financial Services 25 - 30 years ago. Back then, before the Regulator stepped in and banned the practice, Financial Advisers were largely paid by suppliers for introducing business to them. This allowed the Adviser to say his advice was "free" or "paid for by the supplier". This of course is nonsense. The customer still paid via additional charges on the product they purchased.

I believe that banning this practice had a direct impact on how Financial Advisers started to be seen as far more professional and on a par with Solicitors and Accountants. It brought credibility back to a valuable service.

However, businesses shouldn't wait for the Regulator to step in. They can decide that being Transparent is actually a way of demonstrating that they genuinely care about their customers. When I met the senior managers at LG Energy Group one thing was said more than anything. "We are proud of what we offer and we will always tell the customer the cost upfront". In fact, at LG Energy Group they write it into their contract!

So, customers can test a Consultants commitment to them by simply asking "How much and how do you get paid for this?"

I've witnessed Mr Slick tie himself in knots trying to answer this question. If this is what you encounter, I'd wonder whether you really are at the centre of his thoughts or whether a supplier could be.

Ask about the following:
Undeclared Commission

Is your Consultant happy to discuss exactly what he's getting paid from a supplier if he places you with them? If not, why not? Remember, you will pay for this via an increase in your Unit Rate. I'd at least want to know what that was.

LG Energy Group believe it is only reasonable for the customer to understand explicitly how much their energy broker is receiving, and where this is coming from.

Double Commissions
This is the same but potentially worse, some Brokers end up getting paid twice - once by the customer via a management fee, and then again by the supplier. LG Energy Group recently came across a retailer that was paying approximately £15,000 in annual management fees. We suggested that there may be a broker commission involved too and it transpired that the broker was taking £300,000 per annum from the supplier, without the consumer’s knowledge.

Are we clear yet?
If your Consultant is hesitant to tell you exactly how much they are charging and that they don't receive anything on top, Mr Slick can discuss Championing the Customer all he wants. It's a con.

Quota-based Incentives
Some energy brokers often have quotas in place with certain suppliers. This means that brokers are financially incentivised for referring a certain amount of business to that supplier. Although this makes good business sense for the broker, it at least creates a conflict of interest. When it comes to the crunch will the valuable incentive be more important than one customer?

Brokers should be mindful of placing customers with suppliers without completing a competitive tender if they are putting your needs first.

So, in the end, most if not all Consultants are going to say YOU come first but you can test this. Make them explain how they get paid and what their service is going to cost YOU. Listen to their reply and then call us at LG Energy Group!

Contact at LG Energy Group
(mention BPF Member)
12th Floor, City Tower, Piccadilly Plaza, Manchester, M1 4BT
Tel: +44 161 401 1001
E: [email protected]  
Web: www.lgegroup.com