by Chris Jones, Chief Product Officer, Dynamic Planner
The Financial Conduct Authority have published the long-awaited findings of its review into the delivery of ongoing advice – and the news is good.
In 83% of cases where firms had committed to providing suitability reviews, those reviews were delivered. In 15% of cases, clients either declined or did not respond to the firm’s offer of a review. In fewer than 2% of cases did firms report they had made no attempt to provide the promised review.
In response, the FCA is asking all advice firms to review its findings, and to consider whether they have met their regulatory requirements and contractual obligations regarding ongoing services. In the cases where reviews were neither offered nor provided, the regulator expects redress to be due.
Oversight is key to ensuring compliance
The FCA’s review focused on larger firms – and provided examples of best practice that smaller firms should now look to follow. Firms that got it right had ‘effective systems and adequate resources’ to ensure reviews were scheduled and offered as agreed with the client.
Many of those larger firms are already Dynamic Planner users, so this is no surprise to us. We know firms need processes and management information they can rely on to enable them to control, oversee and evidence compliance with their contractual and regulatory obligations.
Dynamic Planner Insights provides you with a comprehensive suite of reports to monitor and manage your clients and your business. Reports cover all client, advice and planning activity undertaken in Dynamic Planner – including reporting on ongoing servicing tailored to meet FCA information requests.
A good time to rethink your advice and service proposition
While the regulator does not expect redress to be due in the cases in which clients declined or failed to take up an offer to complete a suitability review, it does raise a question over the future provision of ongoing advice to such clients.
If a client has persistently declined a review or failed to engage over a number of years, the FCA expects firms to consider whether an ongoing service remains in that client’s best interest. At 15%, those refusing or failing to take up reviews represent a sizeable proportion of the advised population, and firms who wish to retain those clients should take action now.
While there a wide range of platforms, products and investment solutions to choose from for different client groups, the most important advice and service propositions are quite homogenous. Why not mix it up with something new that the client will enjoy and engage with, and which you can afford to deliver?
Our white-labelled mobile app, Tram, is a powerful route to enhanced engagement, putting the financial plan in the palm of the client’s hand through a seamless digital experience.
With Tram, clients have instant access to their portfolio, objectives and risk level, wherever and whenever they need it. Secure in-app messaging reduces the email and admin burden for both adviser and client. A growing library of tailored content can help you strengthen and deepen the relationship, drive return visits and demonstrate your ongoing value.
Look out for further developments
Finally, the FCA has committed to review the rules relating to ongoing services ‘to make sure they remain fit for the future and help as many people as possible to get good support in managing their financial lives’.
The requirements for an ongoing service have been ripe for a revisit for some years, so this should be seen as a positive for the sector. As the regulator notes, new business models and technology have come to market in the decade-plus since the Retail Distribution Review, and client needs are changing too. A service centred on the annual review may no longer be right for all your customers.
Greater flexibility here will allow firms to innovate and design ongoing services that meet the full spectrum of client needs, helping you to address the growing digital audience and reach new target markets.
Not a Dynamic Planner user? Schedule a no obligation demo to see how we can support you with your review process.
