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FDS presents client retention challenge

Many financial planners might struggle to articulate their value to passive clients come fee disclosure statement (FDS) time, according to Elixir Consulting managing director, Sue Viskovic.

Once advisers get their head around the technicalities of the FDS requirement, Viskovic said the challenge would be around making sure the clients receive the information well, particularly if there had been no regular engagement.

Elixir will provide training to advisers around this issue, but Viskovic said not all advisers would struggle.

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"The clients who are already engaged with an adviser are not an issue, because advisers deliver their FDS in person when they come in for their review," she said.

"The actual document might be a bit different, but the conversation will be similar to what the client is used to."

Other clients, however, might not be used to a re-focus on fees.

"The biggest issue would probably be clients who do pay fees, but don't actually participate and come in on a regular basis for their review," Viskovic said.

When the industry started to weed out commissions, many planners started charging asset-based fees - or a commission/fee combination - but many planners failed to let their clients know about the change in pricing and the ongoing services provided, Viskovic found.

"This is where the practical reality comes in," she said. "If you have to send out that compliance document that says ‘hello, you haven't heard from me in a while but by the way I'm earning all this money from you" then obviously that could mean that clients might not receive that information well."




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