24th June 2013

FundsNetwork: Client reviews in a post-RDR world

In this post-RDR environment, it is increasingly likely that advisers will have or will be in the process of shifting their businesses to one that secures its revenues largely from regular or recurring ongoing fees. Another consequence of the regulatory change is that customers are naturally becoming increasingly well informed and are now keener than ever to ensure that they are receiving value for money when it comes to financial advice.

One way for advisers to demonstrate value is to hold a comprehensive face to face annual financial review for clients. However under the back drop of the ever changing landscape and as more clients pay ongoing fees, there is likely to be an increasing emphasis on how regularly clients want contact with their advisers. Clients have always valued the review process and in an environment where client expectations are getting ever higher, it is only natural that many will want to review their finances on a more regular basis. Indeed, in a recent paper from CWC Research*, there was evidence to suggest that one of the things that clients value the most from their adviser is their regular reviews and ongoing service.

However, the commercial viability of conducting reviews, particularly of the face to face annual variety, is increasingly under pressure. The CWC research estimated that the cost to advisers for annual reviews is approximately £1,400. It also found that many advisers are charging, on average, less than 1% of the assets they are advising on. It doesn’t take a genius to work out that, in practice, these types of annual reviews are likely to be only feasible for clients with higher portfolio values and that’s only if they are willing to pay for it. So commercially it makes little sense to offer these types of reviews to everyone but clients value them – that’s a conundrum!

One solution for consideration is a managed investment service which can help alleviate the time pressure for advisers whilst allowing them to continue to demonstrate their value to clients on a repeatable and regular basis. A robust service will typically enable advisers to provide monthly investment updates for their clients in writing or by video, as well as providing regular reporting to ensure ongoing suitability. Furthermore, some services of this type also offer richer reporting for clients which can help advisers meet MIFID requirements. Most importantly, a quality managed solution will allow advisers to do all this in a straightforward and time efficient manner and their clients will appreciate the value and service they are getting.

Now, I’m not suggesting that the services and tools provided by a managed solution will be able to cater for all of an adviser’s client reporting and reviewing needs. However, in this challenging environment of increasing regulatory costs and pressure, as well as ever rising customer expectations, a managed solution can help advisers to regularly service clients much more efficiently and profitably – and that can’t be a bad thing, can it…

Klare Baldwin, Head of Marketing, FundsNetwork™

More Infomation

*Source: CWC Research, No Small Change, May 2013

RDR