Since we made our Investment & Retirement Proposition Template available to firms outside of Sense Membership in 2020, over 300 UK based advisory firms have downloaded the template.
So for 2022 we've decided to take it up a notch...Click here to read the updated blog
We've improved the layout (making it easier to tailor the guide for your needs) and added more detailed guidance on each section of the template. This is just one of the specialised areas of support we provide to our member firms so If you would like to hear more about this type of support and how being a member of Sense Network could benefit you and your advisory business, please do get in touch via the website here.
Read the original article below...
Segment your clients by more than their assets under management. Client segmentation is about distinguishing between different types of clients based on their advice and investment needs and tailoring your service accordingly. A client aged 40, accumulating wealth for future retirement has very different requirements to a retired client drawing income at age 60, even though both may have a portfolio of £250,000.
Carry out independent research. When you select solutions, such as model portfolios or platforms, to be used for groups of clients, you should do so by considering a range of options, as you would for individual clients. Your research criteria should be based on the collective client group; for example, cost comparisons should take account of the likely range of client portfolio sizes.
Challenge your previous views. If your research shows that more suitable options could be available for your clients than those you’ve recommended previously, be open minded, find out more, and if appropriate, change your approach – for new clients at the least. We all know it’s easier to stick with the familiar, but the options available are always evolving.
Where cheaper options exist, ensure there is sufficient additional client benefit for choosing a more expensive solution. We understand the difference between cost and value, and certainly don’t believe that cheapest is always best. Having said that, your clients pay for the solutions you recommend, and in many cases will do so for many years to come, over which time even small cost differences can accumulate. If you feel a more expensive solution is appropriate for your clients, ensure the additional benefit (for them, not you) is sufficient for the extra cost, and clearly articulate this within your proposition document. If there is no additional client benefit, or it doesn’t outweigh the cost, see the previous point…
Be clear about how you used your research to make decisions. Including a research report on the solutions you considered (e.g. model portfolios, platforms, etc.) plus a note of which one you chose doesn’t show how you made the decision. In most cases research identifies a number of potential options, depending on how you use the data provided. Include commentary within your proposition document to explain the analysis you carried out and how and why you made the decision you did.
Use your own words. Although we have included some standard text in our proposition template, in areas where we know firms’ processes are consistent, much of your investment and retirement proposition should be articulated in your own words. Doing this means you’ll end up with a personalised document truly based on your own clients and business. Watch out for this in particular when explaining why you have chosen specific investment solutions. Including standard text from providers doesn’t explain why those specific solutions are suitable for your clients.
Ensure advice is led by you, not your clients. Although clients have preferences, and you will of course take these into account in your approach, the ultimate decision about which investment solutions, service level, etc., your clients receive should be yours, based on your professional knowledge and experience. Within your proposition document avoid making references to allowing clients to choose between multiple options.
Think about who your main proposition solutions may not be right for. One of the main risks of using investment solutions or platforms which you choose centrally for multiple clients is that all clients are ‘shoehorned’ into these solutions without due consideration of their individual needs. As well as your primary client segments, ensure your proposition document reflects the types of individuals for whom your main solutions would not be suitable, and how you would deal with such scenarios.
And finally… review your proposition regularly. The frequency at which it is appropriate to review your proposition depends on the proposition you operate. For example, if you run your own fund panels, it’s likely to be appropriate to review these on a very regular basis, whereas if you use external solutions, such as model portfolios, less frequent reviews are probably suitable. As a minimum, you should commit some time to formally review your whole proposition at least once a year. This means revisiting your processes over the previous year, re-running research if appropriate, and reflecting on whether your approach remains appropriate, for both your clients and your business. Your proposition review, and conclusions should be documented, and your main proposition document(s) updated to reflect any change in approach.
