Sandringham – aligning service and products
Chief Operating Officer at Sandringham Financial Partners, Tim Grey, explores a recent Financial Conduct Authority (FCA) statement1 which highlights concern about the ‘value’ of services offered by advisory firms in exchange for ongoing clients’ fees.
Firms can wait to be told what the FCA thinks and importantly, what it dislikes about ongoing service and fees, or like Sandringham, they can seek to address an issue before it becomes a problem.
All it takes is a PROD
PROD, as it is known, aims to improve firms’ product oversight and governance processes and as part of this, the FCA is asking firms to think carefully about providing services that clients really need. So, rather than offering a default ongoing service option that the client may not need or providing information that the client could obtain for free elsewhere, firms should consider how they implement their proposition with clients.
It’s easy to see where the FCA are coming from. All too often, firms have made decisions about the products they recommend that are separate from the ongoing service the client might need, or that the firm wants to provide.
What service does a client need?
Important servicing activities fall into three main categories:
- Providing detailed information instantly and accurately. Providing a valuation is simple but more detailed data, such as CGT calculations, is not within the capability of most back-office systems
- Making difficult things look easy. For example, rebalancing and ‘smart switching’ if a client alters their risk tolerance
- Making it easier for clients to invest more. Providing education and financial coaching to help clients increase their wealth.
Technology plays a vital role in any advice firm by supporting efficiency and profitability, allowing advisers to spend their time in providing the best outcomes for clients and achieving their own personal and business goals.
Too often, advisers are encouraged to use many and varied providers and funds through disconnected technology, which then have to be ‘stitched together’ at a later date.
What might a perfect solution look like?
The FCA has stated that it can see the ‘absolute sense and good practice’ in firms operating a ‘tier 1’ proposition that meets 50-80% of its clients’ needs, as well as having some other ‘tier 2’ options for when clients’ needs stray from the defined path. This ‘tier 1’ proposition must provide seamless and direct information to the adviser.
Secondly, the investment solution must be demonstrably notable.
Thirdly, it must be transparent and engage clients so they continue to add to their wealth, or at least not to make poor decisions and decrease it.
Finally, it must work for the adviser and their advisory business, so you have a level of service to set you apart from your competitors.
If you want to see how Sandringham can help to you build a proficient, profitable and future-proofed business, please contact us. https://recruitment.sandringham.co.uk/speak-to-us/
1 FCA Policy statement 20/6 (June 2020)
Sandringham Strategy Series Q3 2020 – author Tim Grey