For those internal administrators out there on the verge of pulling your hair out, look no further… we have the answers for you!

Let’s face it, we all know how painfully time-consuming chasing insurance companies can be! Unfortunately, we can’t create any miracles here – however, we may just have some handy hints and tips to ease your stress levels when sending off a Letter of Authority (LOA).

Letter headed paper

To begin with, we would always recommend your LOAs are printed on letter headed paper. You may slip through the net on occasion without a letter headed LOA, but the chances are slim these days. There’s an hour of your life you won’t get back sitting on hold, waiting to find out it’s been declined! If your letterhead doesn’t include the firms’ company address and FCA number, we would recommend that this is to be included within the main body of the letter. This is always required by insurance providers so shouldn’t be avoided.

Info, info, info!

No doubt you will have come across a situation where the adviser has met with a client and the client has no idea what type of plans they have, just a few annual statements stored away from previous years. Our advice to you would be to find out as much information you can from any documents the client has such as, what type of plan this is & plan numbers etc.

You should then have enough information to confirm with the provider which department to send the LOA to, how they would prefer to receive this and whether they require a wet signature, or are happy with a scanned copy. The more groundwork that is done at this stage, the easier it should be once the LOA has been sent off, as you should have a specific department to chase and confirm turnaround times etc. Otherwise, the LOA could disappear into the depths of Aviva, never to be found again.

Most providers will only implement LOAs for a certain period of time. Therefore, if your firm is looking to retain ongoing servicing for the client until requested otherwise, it’s worth including a brief sentence stating this.

What else?

Other points we would recommend to include in your LOAs would be the following;

Clients’ Name

Clients’ D.O.B

Clients’ Address

Clients’ NI Number (required for Final Salary schemes, not generally necessary for money purchase & investments)

Clients’ Signature

Plan Type/s

Plan Number/s

We hope this provides you with some guidance – good luck!
Recently, our Director of Culture and Engagement, Natalie Bell, wrote an article for Nucleus’ Illuminate, on adapting learning styles to suit your team – catch up below…

Advisers, financial planners and their teams have to deal with an ever-evolving backdrop as they go about their day-to-day roles of serving clients.

This means continuous learning and development is crucial at all levels of the business in order to stay well informed and working at the top of your game.

But this requirement can present a number of challenges for employers and managers wanting to design training programmes and initiatives for their diverse employees.

We’re all different. But when it comes to personal development and growth, we all broadly slot into three categories of approaches to learning, or ‘learning styles’. These are visual, auditory and kinaesthetic.

Learning styles and how to identify them

The Visual Learner: (estimated to be 65 per cent of the population) This is the most popular style of learning, and these learners gain knowledge through visual information and imagery. They learn best when information is broken down into clear sequences, and which is presented in formats such as pictures, charts, diagrams and text.

The Auditory Learner: (estimated to be 30 per cent of the population) Auditory learners gain knowledge best when it is shared out loud – through methods like lectures, presentations, podcasts and one-to-one teaching. They are also the type of people who will talk their way through a problem or repeat information aloud to help them retain knowledge.

The Kinaesthetic Learner: (estimated to be 5 per cent of the population) Kinaesthetic learners gain knowledge through practical experiences. They learn by ‘doing’, not by listening or reading. They also appreciate walk-throughs and diving right into a project with a more trial-and-error approach, much like role-play or scenario setting.

Why do learning styles matter?

It’s no secret that some of the most successful businesses are those that have fostered a diverse workforce, and benefit from that variety.

Organisations are essentially teams of people, each with their own learning preferences and personality types.

As a result, leadership teams need to understand how to adapt their management style to provide the best environment possible for each employee to flourish and succeed.

Importantly, this needs to be reflected through developing a broader understanding of effective communication across the company, with employees who all process information and learn in different ways.

Understanding an employee’s learning style is particularly crucial in a fast-paced working environment, where time wasted on ineffective training costs money and slows productivity.

Failure to do this could lead to underutilising or overlooking talent that exists within your team, if you were to start offering training and motivation ideas such as employee rewards you might also see an uptake in the effort your workforce puts in as a whole, you can look into the psychology of rewarding your team by reading an article like this published by Blueboard.

Understanding more about your team

Being aware of your team’s preferences is the first step to making all areas of your workplace a more engaged and motivated place to be.

Regardless of the type of learner your employees are, development and training opportunities within the workplace need to be as engaging and diverse as possible. Once their ambition has been aligned to the business need, the design and delivery of training should complement your overall culture.

If you’d like to take a deeper dive into learning styles, 16 Personalities offer an online questionnaire to complete which gives a more comprehensive breakdown of individual personality types.

It’s a free tool (which is always a plus!) and a great introduction for anyone looking to dip their toe in the water in understanding their team more without a potentially huge initial outlay.

After completing the questionnaire, there is practical guidance, advice and things to look out for in relation to each personality type, which can really help with more effective communication, learning and teamwork.

The question of time

I know from personal experience that time is often the greatest challenge when it comes to designing effective training programmes, but sometimes important training courses can be readily available to use without needing to take the time taken to design them. A good example of this is Coast2Coast First Aid and Aquatics which would get staff fully equipped for any incident that involves performing first aid or CPR.

Having developed our learning and development framework for Para-Sols and Apricity, I’m well aware of the sheer volume of blood, sweat and tears that goes into a) designing the content and b) ultimately, delivering it too.

We’ve been asked many a time by advice firms big and small whether we offer training, as the success of our training framework has ultimately been responsible for our own scale and growth over the last couple of years.

We know the power of quality training and how it results in a more engaged, fulfilled team. Naturally this can then be used to benefit a business and help it scale.

With all that in mind, we launched The Art of Finance earlier this year. This is a training solution for people with little or no experience in financial services, making it easier for employers to upskill their team with minimal in-house effort.

As you’d expect, it’s built on the premise of understanding learning styles and purposely restricted to small cohorts of 10-12 people. This offers a more exclusive, coaching-like approach to learning and development.

It combines what’s required to achieve Level 4, along with the practical skills needed to be a successful paraplanner or compliance officer.

There’s no death by PowerPoint and we supply a range of tools and learning resources such as virtual breakfast study clubs, ‘experiential’ classroom sessions, webinars, MP3 downloads and more.

If you still need convincing…

Regardless of how you approach your training – whether with an external provider or in-house – the ‘why’ should be really clear before the ‘how’.

Good quality training will ultimately:

  • Increase employee motivation and job satisfaction;
  • Reduce the time taken to learn new skills, while making sure no one get left behind;
  • Improve staff retention and discretionary effort; and
  • Help you understand your team better, and carry out more effective and realistic performance appraisals.

Adapting training and communications might seem daunting, but my greatest piece of advice would be to simply ask your team: ‘how do you best learn?’

Use that as your starting point, then take on board their feedback and experiment with the next piece of training you deliver. As one example, you could then try and increase the development rate and education of employees while tracking their improvement and performance, as well as being able to record their perception and opinions on the new direction the business is heading by implementing a Learning Management System or something similar to create a suitable and educational environment for beneficial transformation.

With the right mindset and supporting tools in place, your business will find it easier to learn and adapt to the changes that technology, regulation and the economy throw at you.

Our Director of Quality and Operations, Jo, explains how we manage to attract so many wonderful paraplanners, and being the huge Marvel fan that she is, the Avengers references were a must! Over to you Jo…

 

“One of the things I get asked about the most is how we’ve managed to scale our business and assemble a super-team of paraplanners, when paraplanners are harder to find than a cinema which isn’t showing a super-hero movie.

We learned a long time ago, that there just wasn’t enough paraplanners available to allow us to undertake our plan for paraplanning world domination and that we would have to grow our own, in super-secret labs (cleverly camouflaged as a normal office space).

At present we have 17 full time paraplanners, of which all but 3 have come through our graduate programme.

The Grad Scheme

And therein lies our secret weapon. The Grad Scheme our graduate intake programme. It carries a tagline of #capesnotsuits and this turned out to be more prophetic than we could have imagined.

That in itself wouldn’t be the answer, but the refined application process followed by the after care and ongoing training, has assembled a squad of amazing paraplanners and I’m willing to share a few of our secrets (we’re not the baddies in this story).

This last month saw an unprecedented response to the scheme. It has really picked up traction lately, as word gets around about its informal structure and huge potential for an amazing career opportunity. From literally hundreds of applications, we whittled down our shortlist to a mere 20, elite applicants to attend our Assessment Day. Shortlists are stringent and based upon their CV, covering letter, English and Maths tests.

Only the strongest survive. Like the hunger games, but with less bow and arrows, and you know, death.

The Assessment Day

On the day we keep it pretty informal; there’s group activities, ice breakers and all feedback we receive states how much the applicants respond well to the casual setting and approach. Once they’re relaxed, they show their true selves much quicker and this makes our job as assessors much easier.

Without sounding like the arrogant super-villain, we feel that we can convert almost anyone into a super-paraplanner, with time, care and our thorough training. Most people can do most jobs, with the right care. That’s a good theme to remember when you’re selecting your next employee. We tend to assess the softer skills of the applicants. Looking at how they would fit into the team, what they could bring to the business and how they think outside of the box.

Broadly, we use a number of tasks which are designed to test the subjects on three core areas, which are aligned with our company values.

Got Your Back.

World Class Quality

Innovation

Got your back is a teamwork challenge. We assess this in numerous ways, looking at how the applicants interact with one another during various team-building tasks and how they communicate and compromise when needed.

For quality, this is a more lateral approach, including research tasks and paraplanning specific tasks.

For innovation, the prospective employees undertake a creative project, which they then have to present to us, in a short elevator pitch.

We also have one-on-one interviews to allow the quieter applicants to still get their chance to stand out and have their say. Questions centre upon life experiences, rather than work experience, as we’re very aware a lot of graduates don’t have the lateral, work skills, so we discuss those skills that are more transferrable.

Our leadership team, who attend the day, then go through all the applications, looking at the above qualities and we decide who gets to come onboard. It is one of my favourite days of the year, seeing such potential and knowing we’re giving a chance to some people to have a very exciting career and create their own super hero story.

From the last cohort, 6 applicants were accepted and I am very excited about them starting, so they can reveal their super power and help us save the finance world from boring grey suits, one paisley tie at a time.

All that’s left to say is Grads, ASSEMBLE!”

Applications for The Grad Scheme can be made here.

With recent changes to FOS requirements and the impact to professional indemnity insurance providers, the CII provided a timely event in Leeds this week to address the complaint concerns from the side of a solicitor firm handling the disputes. The meeting was held by Mills & Reeve LLP, who are professional indemnity insurance and commercial disputes litigators.

It was clear to them (and anyone in financial services), that the IFAs are now more accountable as pension freedom, client’s access to DIY research, greater capital reserves and a client’s desire to make money work harder, has created a greater interest for investments. With the knowledge that consumers have the free protection of FOS and the Claims Management Companies (CMCs) supporting a no win no fee culture, the advisers are facing a ‘perfect storm’ on the advice they give.

Undoubtedly, the effects of this storm may not yet be seen – Warren Buffet famously said “only when the tide goes out do you discover who’s been swimming naked” and therefore the opportunity to look for potential poor advice will come into focus when the next market fall occurs.

The focus of the remaining part of the meeting was to highlight the concern of a litigator when they are dealing with claims.  They stated that the reports they see have 2 elements that FOS will look upon, the suitability of the advice, and the suitability of the product.

 ‘You should never have advised the client to …’

They stated that the claims for suitability of advice would fall foul when the lack of alternative options was not discussed or evidenced. They found that the lack of benefits to say why the transfer or switch was in the client’s best interest was also a common theme.

‘You failed to warn the client of the risky nature of …’

The complaints were upheld when a failure to assess the client’s attitude to risk was completed correctly, and/or a lack of sufficient experience was established. In some cases, reports lacked detailed risk warnings to validate the recommendation.

Access to FOS

The explanation on how they feel FOS approach disputes was a topic that grabbed the attention of the room.

They stated that FOS has ‘wide discretion’ and will generally take customer-focused fairness towards its outcomes. Although FOS must adhere to the rules and regulations, they are not bound by the law when they feel the outcome is fair and reasonable for the client. Therefore, this will undoubtedly create some inconsistent decisions.

One of the rules that Mills & Reeve commented on was the 6-year time limit for complaints – they stated that this was something that was not a fixed rule and they often saw cases that exceed this term.

Insistent clients

The complaint involving insistent clients was one of the topics that were often seen on the litigator’s desk. This was mainly due to the process of (or lack of) a good understanding of the insistent client rules. They commented that it was not enough to simply rely on a standard insistent client form for the client to accept responsibility, as this was not sufficient to evidence that the client understood the consequences.

They commented on the FCA requirements to have a hand-written client letter or taped discussion (with agreement), to confirm the client’s understanding of the firm’s original recommendation not to proceed and their own statement confirming their understanding of the recommendation and their acceptance of consequences when rejecting the advice. They feel that this was often the best way to avoid any poor outcome.

Mills & Reeve summarised their top tips to help avoid potential complaints being escalated:

  • Ensure your meeting notes are documented clearly (this is also a MiFID requirement).
  • Don’t advise on areas that you are not familiar with.
  • Don’t be complaisant with long-standing clients or become too close.
  • Review files with peers for second checks.
  • Keep up to date with new developments (check COBS rules).

Ensure you have adequate PI cover

The recent PI changes, following FOS updates on the 1st April, has made many firms look at their own PI cover. Mills & Reeve stated that it is important to know what is, and what is not, covered by your PI insurance.

The current market conditions have led to a price-conscious approach to PI but it is important to know now what you fully protected for, in the event of a claim. It is important to know what exclusions are in your PI cover and if this will impact on your firm’s investment proposition.

In conclusion, if you operate a ‘whiter than white’ approach to everything stated above then you can sleep easy in your beds tonight, for those who may have some grey areas in their standards, it is a good time to review your processes and tighten up on areas that may leave you potentially exposed to future complaints. For those who live in the dark side, hold on for a bumpy ride!

Our Founder and Director, Cathi, spoke to Money Marketing about taking suitability to the next level – catch up on the article below…

“Paraplanning is about much more than suitability reports, but there is no denying they are a fundamental part of the role and one of the trickier elements to get the right balance on.

Unfortunately, it is still the case that paraplanners have the conflicting challenge of creating something that:

  • Each client can refer back to, and fully understand exactly what has been recommended;
  • Is considered compliant (bearing in mind this will mean different things in different firms) and covers all regulatory requirements;
  • The adviser is happy with. Each adviser will also have their own preferences, which is understandable given this is the written representation of their relationship with the client.

So it is not surprising there is no one-size-fits-all approach to suitability reports. However, paraplanners should consider the following as a starting point:

  • Know the compliance requirements within a firm, as indicated by either the internal compliance team or external support. This should be broadly fixed and something the paraplanner gets familiar with at the outset;
  • Consider the adviser this report is representing. Are they focused on it being efficient and as short as possible, or are they a detail person and would prefer there to be more information for them to have a more thorough conversation with the client?
  • Think about the client and the advice. An experienced investor doing an Isa top-up will require a different approach to someone getting advice for the first time and consolidating a number of plans which have been accumulated over the years.

Do not be afraid to bring this level of personalisation to each case. The importance of suitability reports should not be underestimated and this approach will help maximise the potential of them achieving their ultimate goal: to put the client in a clear, informed position.

Then ensure the report covers five key elements. Most reports comfortably cover the first three, which are:

Who

Who is the report directed at? Usually straightforward enough, but important to consider carefully where there are multiple clients, powers of attorney or trusts involved;

What

What exactly is being recommended? This is very tangible; for example, an investment into a general investment account or a transfer of existing pensions;

Where

Where are the funds recommended to go? This will cover both provider and investment strategy.

So far, so straightforward. But there are two more elements, not always covered so comprehensively:

Why

When I started in financial services, suitability reports were called Reason Why letters, and that remains a fundamental factor. Why exactly is this the advice being given right now, for this client? Why the pension transfer? Why that provider over others? Why that investment strategy for their risk profile and objectives?

How

If the why is a shorter-term consideration, the how is the longer-term issue. How will this advice ultimately meet the client’s objectives? Any recommendation is unlikely to immediately achieve goals, but may be the starting point for setting clients along the path to hitting them. The suitability report should be able to position the advice in that way.

A compliant report will cover the first three points but a really good report, that provides context and clarity, and helps the client understand the advice in relation to their own goals, will cover all five.

The suitability of the advice is not dependent on the suitability report alone; it is based on the whole file and every stage of the advice process. But there is no doubt the report is the focal point that pulls all of these facets together and should give a firm comfort that a client’s understanding has been at the core of the process.

So, a starting point of understanding the compliance framework in which you are operating, tailoring the report to both the client and advice type, as well as the adviser’s preferences, and giving it a final review at the end as to how clear the why and how are covered should help take your reports to the next level.”

Recently, our Head of Quality & Operations, Jo, wrote an article for Nucleus as part of their series on suitable advice. Catch up below…

“Can I ask you to cast your mind back to 2014 for a moment; we were all reeling from Gwyneth and Chris ‘consciously uncoupling’ and England being knocked out in the World Cup group stages.

And if the Ice Bucket Challenge didn’t wake you up, then the announcement that the way pensions were to be taken was to be totally revolutionised, certainly did.

There was mass panic that all of our clients were going to take all of their pension funds at 12.01 on their 55th birthday and buy a super yacht… or a pedalo (depending on the funds available). However, 2015 rolled around and this didn’t happen (well not all the time) and this was due to in no small part to the amount of planners providing suitable advice to their clients.

Yes, my view may be skewed in that I only tend to deal with new model advisers and those planners who offer a great, holistic service but I was encouraged by the common-sense approach so many people seemed to take following their planning meeting.

Taking that into account and while not teaching you to suck eggs in any way, I’d like to share my top five tips for suitable advice around pension freedoms.

Clear and specific objectives.

The FCA hates a generic objective, as do I. The advice must show that it meets specific objectives but if they are absent, it’s much harder to prove you’re providing suitable advice. I’d much rather see a “the client wants to buy a yacht when he’s 68” than “the client wants flexibility in retirement”. Don’t we all? The outcome would be the same. Switching to Nucleus to provide growth until such time they hit retirement, at which point they move into drawdown… but the client (and your compliance) much prefers the specifics.

Cashflow planning.

This should be completed at outset and regularly. Include a variety of scenarios and stress tests. This is invaluable to the client who can be shown exactly what it means to take an income and how a change in retirement date, growth or withdrawals can impact them.

Drop the jargon.

Honestly, clients do not want to hear about how a growth of X% and withdrawals of Y% result in a net loss of Z% to the power of blah. They want to know they can take £10,000 a year from their pension and not have to die earlier than planned. It’s really that simple. Do all of the calculations and formulas you want for your file. When you see your client, keep it simple and straight forward. Avoid percentages and basis points and long words such as decumulation. Can they afford to retire when they want, with how much they want, or not? That’s what they want to know.

Don’t panic.

I see a lot of client meeting notes with people worried about inflation, the global economy and let’s not even touch on the dreaded B(rexit) word. I always say to people, don’t panic. If you have a good plan in place, provided by a good planner, these external things don’t matter. Yes, there will be fluctuations and some turbulence and it might get a bit rocky, but if the cashflow has been tested and stood strong, the plan is likely to be unshaken much over the long term. Keep calm and carry on for wont of a better, less used, outdated phrase.

Risky business.

Risk is a bit of a buzz word for me at the minute. I can see a great plan for a client based upon a generic balanced level of risk. I’m always wary seeing someone who’s need for risk exactly matches their attitude to risk and their capacity for loss. I would like to see a need for risk being more calculated as in, you require £10,000 a year in 10 years time and your based on your current value you would need a X amount of growth. That’s the risk you need to take. The risk you want to take may well be very different. It’s finding a plan that compromises between the two. Capacity for loss is a different being altogether and should not be linked to the above two. I would expect to see further calculations showing exactly how much the client can afford to lose these funds; how much and for how long. This can be easily shown via cashflow, but should be a specific amount, not just a generic sentence such as “low to medium losses can be tolerated”.

I’m off for a ride around on my pedalo now, but if you have any questions, feel free to drop me a line.”

Our sister company, Apricity, have released a whitepaper entitled just that – Compliance: The Good. The Bad. The Future. It explores the current regulatory landscape – what’s working for you, and what isn’t – and just as important, it gives some insight on what the future of compliance will look like.

Apricity had a busy start to the year, reviewing and synthesising the responses to their engagement survey last year. With just over 100 responses from financial advisers and planners, it’s fair to say that there was plenty of commentary to digest.

To download your copy of this free guide, visit the Apricity site here.

This series of blogs so far has covered; ‘What advisers need to know about CIPs‘ and ‘The highs and (potential lows) of having a CIP – this last instalment will look at how you could create a Centralised Investment Proposition (CIP).

With a CIP, there is no ‘right’ way or method to adopt. You generally need to achieve the following aims:

  1. Outline the service proposition you intend to offer and how clients who require services are segmented
  2. Identify the features and options you want your CIP to offer clients. This should be client-centric and focused on how positive outcomes can be delivered through your proposition.
  3. Identify when the CIP will not be appropriate and what type of process there will be to provide an appropriate solution for these clients.

We will consider each of the above in turn.

Outline the service proposition and segment clients

This was introduced in the first part [link] and does not just help with CIP creation or fulfilling PROD obligations but gives the business more clarity and focus on who their clients are and what they need. You might find the service proposition develops from the process of segmentation and this would be a benefit to both the adviser firms and the end customer.

When thinking about service proposition, the following aspects will influence the CIP process:

  • Review periods – (will there be an annual review or bi-annual review – this could impact on fund switch/rebalancing options)
  • Client communication – In place of more frequent meetings, what level of portfolio update will be provided (will the adviser rely on portfolio managers to update clients on portfolios or returns or will the adviser firm look to provide this for an in-house arrangement) – This will also be impacted by ‘10% drop’ MIFID II rule regardless of approach
  • Cost – inevitably cost will drive the level of service for both parties. The level of service offered/required should impact on how much of an ongoing relationship there will be. There could be a very light-touch process for some clients and the nature of this will influence what investments would be recommended.

After this exercise, you could have the following features of different levels of service:

‘Low’ need ‘Medium’ need ‘High’ need
Review period Annual Bi-annual – annual Bi-annual or less
Communication Annual Bi-annual Quarterly update
Rebalancing Annual More frequent if needed

 

Having formally identified the above, this should help with documenting the CIP. For the ‘low’ need client, there is clearly no rationale to justify the approach of, for example, an adviser managed portfolio created in-house and reviewed on a monthly/quarterly basis.

Likewise, you may identify that ‘high’ need clients have other areas of planning (tax, cash flow, IHT etc.) that will be the focus, and so something that relieves the time spent on the investment management side is a preferable solution.

Identify features and options of the CIP that will be offered

Having considered what level of ongoing service will be offered to what type of client, you can use this to help assist in determining what kind of investment you will consider.

Taking the example of a ‘high’ need client segment, we have determined that this type of client would benefit from an outsourced option, to give the adviser the time to deliver the level of financial planning review needed. As a result, a Discretionary Fund Manager (DFM) option would be the starting point here. This may be on a bespoke basis or a model basis depending on both the level of investable assets to deal with and/or considerations of cost.

You can then consider what criteria is important in this consideration, for example:

  • The importance of cost in a choice
  • Where the DFM is based for reporting and meeting with the adviser/client
  • The range of Model Portfolio Service (MPS) options (risk levels/ethical options/active and passive options)
  • How the risk of an MPS is calculated (does it align with the chosen risk profiling tool?)
  • Experience and financial standing of the DFM.
  • Performance reporting and accountability
  • Range of services offered and platform availability.

There is a wide range of potential criteria that could be used here. You could use an independent research tool (Defaqto/Synaptics) to filter based on the selected criteria. You may then look to meet with potential DFMs or request due diligence packs to review.

Your segmentation might identify clients that would benefit from use of a simplified multi-asset investment available on or off platform. You could use tools (Defaqto/Synaptics/FE) to filter based on the criteria you deem important. This could be such things as:

  • Maximum cost
  • Track record and past performance relative to sector/benchmark
  • Independent ratings
  • Risk levels and whether mapping to preferred Risk profiling tool is possible
  • Insured option or Unit Trust option.
  • Fund size
  • Platform availability if appropriate

You could filter possible investments based on criteria such as the above and analyse the shortlisted options. This should hopefully give you an idea of what investment options suit what you are trying to offer.

You may find from this stage you have something that appears like this:

Segment Investment option
Relatively low value of assets (or just starting) and ‘low’ review need Multi-Asset fund / portfolio of funds

·       No adviser rebalance requirement

·       Low cost

·       Able to accept low values

·       Diversified and able to align with agreed risk

 

This can be continued to cover all the segments identified earlier.

When the CIP is not appropriate or dealing with outliers

 Naturally, there will be a number of clients who do not fit into the centralised proposition. The obvious examples of these are IHT planning investment recommendations but it may also be the case the service and needs of a client are considered on a bespoke basis.

Outlining how you deal with these clients can help complete the CIP. It is important to consider here the research methods you will potentially use. For example, the MICAP tool can be used to research tax or IHT planning investments and a combination of independent tools can be used to research potential options which might cover the following:

  • Offshore investments
  • Specialist ethical requirements (sharia compliant etc.)
  • Family investment planning (JISAs)
  • Trust planning (Charitable trusts)

Conclusion

The CIP should only ever be created and used as a means to support the investment approaches a number of potential clients could be offered, assuming they are aligned with the segment and service offering. It helps bring consistency to the investment advice side for the firm and can justify why one approach suits one client, compared to an alternative approach for a different client.

The main points in how to create a CIP can be summarised as:

  • Clearly identify segments of clients and what each segment should receive (in terms of service and investment approach)
  • Detail the process to selecting the investments that are likely to be offered to a prospective client in each segment.
  • Outline the process in which outliers and those where the CIP is inappropriate are dealt with.

The first part of this series of blogs, looked at the regulatory need to consider a Centralised Investment Proposition (CIP) and the role of Product Intervention and Product Governance (PROD). There does however need to be more benefit for a firm than just ‘box ticking’ and we will consider some of the benefits, along with potential disadvantages, of a CIP.

Consistency

  • Advisers within the firm will have a set process to consider with clients, reducing the likelihood of one adviser using a considerably different approach to another.
  • A consistent process will help with oversight for geographically distributed firms.
  • Annual reporting to clients and reviews can be streamlined.

The FCA have previously highlighted inconsistency between advisers’ recommendations at the same firm as a cause for concern.

Risk

  • A demonstrable process for investment selection can avoid appearing to ‘shoehorn’ clients.
  • A formalised assessment of a particular investment can help if issues arise years later – without a CIP it might be difficult to show how the investment was researched and selected.
  • Similarly, effective due diligence on an investment can show, if future problems arise, the selection was based on good faith and on the publicly available/reported information.

Time

  • Reduction in need to ‘fund pick’ for every client freeing up time for other elements of the advice process.
  • A recommendation to use an investment within the CIP will not need to be researched to the same level for a particular client as it would without a CIP in place.

Processes

  • Streamlining the way in which clients are reported to, which can help set the depth of the overall ongoing proposition.
  • A way in which to review and keep track of the investments used, can be established internally. This would eliminate this requirement from otherwise needing to be part of the general day-to-day tasks.

A CIP can save time for the firm in the long term and for firms with growing numbers of advisers, it offers an excellent way of keeping a consistent approach for the firm to follow. A CIP has some potential disadvantages however to be aware of, the main two being:

  • Advisers attempting to fit clients to segments/investments, potentially being blinkered into thinking a certain client and segment fit better than they do.
  • Using the CIP as a way to avoid any consideration of suitability to the client in particular. If a client falls within a segment and has a particular risk profile, it should not be an automatic conclusion that they use that investment.

While creating a CIP can demonstrate that clients are not being shoehorned, there is also a danger that it can breed this exact issue. A detailed client segmentation exercise followed by a CIP which covers various types of client category along with processes for using a bespoke solution can offer a way to avoid this. In the next part we will look at the steps you might take to create your own CIP.

We are big believers that having good support in place is key to running a successful advisory firm. Getting quality reports turned around and out the door faster than you could do single-handedly, not only helps grow your business, but it means you get to spend more time doing what you do best – seeing clients.

Let’s face it, good Paraplanners are hard to find (we know better than most). Outsourcing your paraplanning support is a wonderful solution to many – especially those who are struggling to find qualified and experienced paraplanner(s) or those who don’t warrant a full-time member of staff. Not to mention the savings on overheads and training resource.

It’s so flexible we’re convinced that it can work for everyone; we can simply fit ourselves into your existing processes and liaise with you like another member of your team with no need to clear a desk for us.

We put a tremendous amount of nurturing into our team, enabling them to be the best paraplanners they can possibly be – therefore we are confident in knowing that the support we offer is of world class quality, it’s one of our main values as a business.

So, how does it work?

We provide you with compliant, quality and client friendly reports that can be personalised to your firm’s brand – logos, colour palettes and preferred fonts – as well as any bits of extra content you may require. Download a sample report here and see for yourself. And if that’s not enough to excite you – our turnaround time is 5 working days from receipt of all information.

Hate speaking to providers?

No problem. Our dedicated Technical Research Team spring into action from the point of sending LOA’s. They are experts in collating all the information needed on existing policies. This is then seamlessly handed over to our team of Paraplanners who provide you with research, cash flow modelling and report writing – there’s no advice area we can’t cover. Find out more about the full team here.

The tech.

Using our bespoke online software, Rise, sharing cases with us is as simple as logging in and entering a few key details about your case requirements. You can have a number of user accounts (at no extra cost) meaning you and your colleagues have full transparency of what stage your case is at, in live time. The system of course is fully secure and GDPR compliant too. Click here to book a demo of the system.

If you still aren’t convinced that we’re the right fit for you – contact Kim, our dedicated Director of Client Relations, who is on hand to give you any further information you require.

2018 was another fantastic year for Para-Sols – you may remember us highlighting some of our favourite moments in our 9th birthday blog, if not, you can remind yourself here.

Entering 2019 as a strong team of 31, across both Para-Sols and Apricity, we are more than ready for the year to come and all of the amazing possibilities that lie ahead.

We can’t go into too much detail regarding our future plans (as it’s all top secret right now!), but what we can say is that 2019 is looking to be one of our most exciting years yet, so watch this space…

So, with that in mind, we thought a good place to start this New Year would be to take a look at what’s to come in the world of financial services – whilst preparing you for any future changes.

Below you’ll find thoughts on current hot topics and upcoming news that we think you should be aware of, from our Founder & Director, Cathi.

Defined benefits

Inevitably, there is much more to come on this. The findings published by the FCA in December 2018 are likely to have caused more questions to be raised, the PI market is in disarray and there is almost certainly more change coming there, plus a review of TVC / APTA and whether they are working as intended is still needed.

SFGB 

You may have seen the releases on this last week as the new Single Financial Guidance Body officially launched – albeit it hasn’t yet been officially named, and needs this and a brand applying. I don’t have a huge amount of positive things to say on the SFGB, and the cash drain it is shaping up to be, so other than to note its arrival, and to be aware of it for your clients, let’s move swiftly on….

New FOS limits 

The FCA proposals to increase the FOS complaint limit from £150,000 to £350,000 are pencilled in for this year. There are pros and cons to this; having witnessed a case where the client and their retirement were severely impacted by the lower limit, I can see the benefit of a higher one. However, the impact on advisers, and their PI costs, particularly in the context of all the other change this year, mean it is unlikely to be as welcomed with open arms as it might have been, had the FCA chosen a more opportune moment to consult on this.

Brexit

The absolute long and short of it is that no one knows what the hell is happening, or going to happen, with this – other than something will happen, and it will be this year. The FCA has been quite proactive in consulting on Brexit, and creating proposals for transitional protections that will make ongoing operations for UK authorised firms relatively straightforward, in theory. And GDPR will have helped the majority of firms get into a position regarding data to smoothly transition to any new rules.

RDR and FAMR review 

Initially pencilled in for next year, the RDR review has been brought forward to coincide with a FAMR review, and will include an analysis on the ‘cost of advice’ by the FCA. No doubt a bit more tinkering will be seen post review.

SM&CR

Already underway, it is anticipated that the Senior Managers & Certification Regime will be rolled out to the remaining firms by December 2019, and this will cover the majority of IFAs, so one to be preparing for.

And this is just the stuff already planned in… there will no doubt be a few surprises along the way to keep us all on our toes!

“The only way to make sense out of change is to plunge into it, move with it, and join the dance.” (Alan Watts)

This saying has particular resonance to the financial sector in 2019. We’re currently facing a time of unprecedented change, a landscape of uncertainty, changes to regulation and Brexit looming – all of which are causing speculation and more questions than answers as to how these changes will affect us.

Para-Sols very own, Jo Campbell, Director of Operations and Quality, was recently asked to give her professional partner insight to Investment Week’s recent video article: ‘What are the challenges facing financial advisers in 2019?’

Along with several financial advisers, Jo outlined her experience of the changing regulatory landscape and market volatility and how they might affect financial advisers over the coming year. Jo discussed how implementing regulatory changes such as MiFID II and GDPR has not been an easy process and has created challenges as a result of poor communication – causing advisers to be overwhelmed with lots of additional pressures. Other partner advisers also described similar experiences to these changes, agreeing that there has been a lack of clear communication, which has affected the way in which advisers can support their clients.

At Para-Sols we strive to meet these ever-changing needs by finding new ways to allow our clients to provide quality advice – for example, we recently launched a bespoke Annual Suitability Report option to cover the requirements outline as part of MIFID II.

With unknown market changes ahead of us, 2019 will inevitably cause disruption and concern for some clients, but it is also changing the way in which advice is being delivered by advisers to the client. “Everybody is now doing more cash flow, financial planning and ‘holistic planning’ – and that can only be good for the client.”

To find out more and to watch the full video click here.