top of page

Now That I’ve Found You, I’m Never Letting You Go!

Autumn Series: The Review Service

A new season brings a new topic. Over the coming weeks I will be focussing on the Review Service, and its importance in the new world of financial planning.

Week 1: Now That I’ve Found You, I’m Never Letting You Go!

If all the value in your clients is embedded in the lifetime relationship (and in my view, it is) then the most important thing to do once you get them, is to keep them – forever.

In the old financial services world, this was a lot easier than it is today. Many financial products paid ongoing trailing commission regardless of whether or not you provided any real ongoing service, and many clients didn’t understand what they were paying for once the initial advice was given. Even if a client did decide they wanted to stop the trail commission payment, it was next to impossible to get turned off. Sure, they could move to another adviser who gave a better service, but it was extremely difficult to call a product provider and say stop the trailing commission. So it didn’t happen.

A Whole New World

In the UK, adviser ongoing revenue can now be turned off by the client. It seems to have only just dawned on some advisers and firms that this is the biggest threat to their business going forward.

For many this will become a greater and greater problem as more new business falls under the new regime, and even legacy business will eventually be caught up in the new rules, putting existing revenues under threat.

A similar change has been brought into the Australian market (yes, the regulators talk to each other) whereby advisers effectively have to re-sign the client to an ongoing service agreement every 2 years if they want to keep getting paid.

It is possible that the adviser relationship will withstand this threat as it has many other threats in the past. The annual review meeting is perceived as pretty high value but the content of the meeting can leave the client feeling like they’ve had a cup of tea and a chat. Are clients willing to pay £1,000, £2,000 or even £10,000 per year for a cup of tea and a chat?

When clients see their 0.5% – 1% of AUM charge converted into pounds, this might well be the question they are asking themselves. With some gentle and loving support from the media they may well be egged-on to cancel their adviser’s ongoing revenue. This won’t start with a call to the adviser, it will be straight to the provider who administers the revenue, making it very difficult and time consuming to rescue the relationship and the fee (if it can be rescued at all).

If this scenario does play out we may see those remaining businesses starting to polarise into high value and low value advisory businesses (and I’ll be discussing more about that next week).

Now is the time to ensure you know who you work for (your clients), what they want (their top 5 issues) and whether or not your proposition meets their needs.

Where Do You Stand?

  1. Do you know the top 5 issues your clients need help with? (Ask this question for each client segment that you work with.)

  2. Does your client proposition address these issues? For example, do you use a cashflow model to show people their situation visually?

  3. Does your marketing material tell your clients that you know their issues and can help to resolve them?

  4. What do you talk about at client review meetings? Are you too investment focussed? If so, could you change the focus to understanding their deeper lifestyle issues?

By Brett Davidson

bottom of page