An administration product, in isolation, offers a very narrow service to clients.
Despite the proliferation of media coverage on wrap accounts and master trusts, the most important point is that both products are simply an administration shell.
Only if these systems are integrated with client services into a comprehensive financial planning service do they seriously add value for clients, generate referrals and aid the growth of an adviser’s business.
Clients are becoming increasingly sophisticated and demanding when it comes to the provision of service, access to their planner and detailed reporting. Today’s clients require access to up to date portfolio information, quality research and prompt advice on the implications of taxation or social security changes.
Importantly, this information needs to be disseminated efficiently so both the planner and the client benefit.
Put simply, many clients now want:
comprehensive and more frequent reporting
the ability to alter their own portfolio records and details easily
a wider range of investments and more sophisticated investment advice and delivery
increased use of the Internet and other electronic media
It is essential that you link the needs of your clients with your chosen administration system. Although the administration system you select is the core of your business, all the additional services you provide must readily interface with this.
Let’s look at some of the value added services in more detail.
Research and investment alternatives
Research commentary should be readily accessible to clients, either distributed by the financial planner in regular reports or via the Internet. The research data made available should not be limited to a specific set of investments offered by a master trust or wrap account, but should be broad enough to cover the complete spectrum of alternatives including retail, wholesale and direct (ie. listed securities) investments.
Research covering new opportunities, such as upcoming public floats or new managed investments, is also an important part of adding value. A step beyond this is the creation of new investment options for clients should the broader retail range not be entirely suitable to their needs and objectives.
Comprehensive reporting service
Clients require regular, informative and comprehensive reporting on the investments within their portfolio. The financial plan is a summary of client information, tax, DSS, superannuation, estate planning, investment, disclosure and disclaimer information.
The planner must add value to this process by explaining this information to the client in an easy to understand manner, outlining how it affects the client’s individual needs and objectives.
As with the provision of research information, all reports provided to clients need to cover their entire financial position and should not be limited to those investments held via a wrap account or a master trust.
Communication with clients
Many financial planners now realise the risks in providing set and forget investment strategies. Increasingly, clients require regular reviews and advice on new opportunities. An active communication program is therefore essential.
As clients become more sophisticated they expect advice not just on managed investments but also on listed securities, which should be available in all tax structures, for example through superannuation and allocated pensions.
Data management and administration
To deliver this level of service in an effective and efficient manner, the planner needs to be in control of all of the relevant information. This requires a management system that controls and disseminates that information to the client.
Clients benefit from lower cost and from having only one contact point for all information and advice.
Dealers also benefit from better compliance management, control over the wider range of products on offer and the ability to offer competitive fee structures by integrating the electronic flow of client information with the management requirements of the master trust.
Clearly wrap accounts and master trusts are capabilities a modern planning practice requires. However, although necessary they are far from sufficient these days. With modern systems which permit more active integration of information and communication, planners can enjoy higher levels of client satisfaction and retention rates.
Under this fully integrated approach, planners spend more time doing what they do best, building and maintaining relationships with their clients. Happy clients mean good business.
David Williams is group managing director, Bridges Personal Investment Services.
