The speed with which the average Future of Financial Advice (FoFA) reform debate becomes dominated by the issue of “opt in” continues to concern senior policymakers but for some planners a compliant model is second nature.
For Peter Keogh, partner and principal adviser at PWK Private Wealth Advisers, it just seems obvious that clients should expect an open discussion on their fees and also the right to decide each year if they think they are getting value for the advice they are paying for.
PWK Private Wealth Advisers markets itself as a small, independently owned wealth advisory firm and was founded by Clem Piscitelli, David Wilcock and Keogh in 2000.
According to Keogh, the company always wanted to be seen as professional – “like accountants or lawyers, where fees are always fully disclosed”.
PPO asked him to explain how this has worked in practice.
As the debate on “opt in” keeps raging in our industry press, a part of me always thinks: What is all the fuss about?
And when I talk to other financial planners or fund manager or insurance company representatives invariably the Future of Financial Advice (FoFA) reform discussion comes up in some form, yet I seem to be the least concerned.
I guess my view on these reforms is different because our business model for over 10 years has already been “opt in” and I believe I already have the full trust and confidence of all my clients.
But this has only been achievable because all our clients are active clients and our client numbers are very small by industry standards.
The majority (over 95 per cent) of our clients are “Review” clients. Each client receives an “Annual Review” document, which covers their portfolio performance and transactions over the previous 12 months as well as comments on the strategy implemented.
A meeting is then organised with the client to briefly discuss what has happened, but more importantly we discuss any changes to their current situation or strategy.
Following this meeting, every client receives a “Post-Review Meeting” Statement of Advice, which contains renewed projections and calculations, adjustments to their strategies, and investment recommendations.
During the year, all review clients have unlimited access to discuss any changes to their strategy or portfolio.
As we run investment portfolios with a portion in listed investments, we also have a regular portfolio review process to ensure all investments remain appropriate and as market conditions change investment advice is given to rebalance portfolios.
In terms of “opting in”, all clients renew their service agreement at their Annual Review.
We set our retainer fee for the next 12 months (either a flat fee or based on a percentage of funds under advice) and invoice the entity/s, which are receiving the advice.
Even throughout the GFC, this process worked as it always had. By continually building the expectation that we will be advising clients over the very long-term, so not opting in is not an option.
In terms of compliance issues, the fact we meet and review every client every year means we never have any concerns about not knowing everything about our clients.
Peter Keogh is a partner and principal adviser at PWK Private Wealth Advisers
