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Upfront about reviews?

Data published recently by Brett Davidson of FP Advance presents a fairly convincing picture of the value of a documented review process - for the adviser:

 

What kind of review process?

% of IFA Firms

Profit per Principal

No documented review process

14%

£56,955

Documented review process

86%

£109,024

 

Clearly, the basis on which we provide our clients with regular reviews is going to vary depending upon our business model (old/transactional or new/planning), or perhaps depending upon our exposure to 'legacy' business and clients where there has been no expectation of a regular review meeting.

 

Why does a documented review process make so much sense?  Here we provide a few suggestions:

  • it puts the IFA where he/she has the maximum economic impact - in front of the client
  • it downplays the 'backroom boffin' role which clients generally undervalue
  • it rightly acknowledges that a relational business model is the lowest-risk option
  • it demonstrates a commitment to the client's personal wealth and interests beyond the first transaction - which within the UK financial services sector is a useful differentiator
  • it recognises that it is rare to solve all the client's financial needs in one go, and provides a framework for systematic implementation
  • it helps educate clients as to priorities and risks
  • it emphasises the value of effective strategies, which can be reviewed and fine-tuned over time
  • it facilitates the earning of incremental revenues, perhaps through top-ups
  • it helps the adviser to manage risk out of a client's affairs over an effective timescale
  • it provides opportunities to ask for referrals
  • it creates regular 'planned activity' within a diary which otherwise might exhibit considerable peaks and troughs
  • it's easy to manage within the contact management element of our excellent backoffice system, 'Clarity'
  • it's a great way of demonstrating that you take TCF seriously
  • in a post-RDR world, a functional annual review service will entitle the IFA to retain trail/fund-based revenues

 

Those firms that do not yet have a documented review process, should spend some time working one up, and then determining how to sell it to existing clients, and new clients.


Kevin Moss, 18/09/2009