Rod Bertino says planners who already run an effective client review process should not be concerned about one of the proposed regulatory changes.
Like most participants in the financial services profession, we have been intently following the opt-in/opt-out debate that has raged since Minister Bowen released his Future of Financial Advice discussion paper earlier this year. While the final form of this element of the reform package is still very much unknown, it did get us thinking about the importance of client reviews and the current state of play in the Australian marketplace.
As the following extract from our recently released Future Ready IV white paper clearly shows, fewer than one in two Australian advisory practices achieved a “Fit” rating in the area of client reviews; and what’s more, there has been only marginal improvement over the past few years.
This is especially surprising when you consider the impact the review process can have on practice profitability. One of the key findings arising from the Future Ready IV research was that, on average, the principals who had taken steps to address this issue were generating 145 per cent more profit than those who had not yet formalised their client review processes.
So, given
a) These profitability findings prove that it makes good commercial sense to regularly meet with clients and review not just their investments or product holdings, but also their life situation; and
b) The review service is such a critical element of any ongoing service offer, and an opt-in regime as outlined in the proposed Bowen reforms could well see practice remuneration more directly linked to a client’s satisfaction with the offer, intuitively we would think that going forward many advisers may be:
i) Far more diligent in scheduling and conducting reviews;
ii) More focused on ensuring the review process meets their client’s expectation (currently fewer than one in three advisers have a structured approach to seeking client feedback – so the potential for disconnect is enormous);
iii) More aware of the real cost to deliver the review service and hence the fees they charge their clients.
So with this increased focus on reviews, we thought it would be of value to share with you what the 40,000-plus clients who have completed our CATScan satisfaction survey have told us about the services being delivered by their adviser and, in particular, their review process.
While many practices have invested countless hours examining the various elements of their review procedures and agonised over the content and layout of their review reports, clients continually tell us advisers often lose sight of what is most important – the client! We hear all too often from clients that while their adviser is very good at investment updates and product evaluations, in their mind, this does not equate to a client review.
First and foremost (and at the risk of stating the obvious), in the client’s eyes, a client review must be centred on the client. It should be all about them – their family, their business, their goals, their dreams and their aspirations. While their money and their policies are obviously important, they should not be the sole focus of the review.
While there is no one “right” answer that is guaranteed to work with every client and in every prac- tice, there are a few common attributes we see in successful practices, as detailed in the breakout box. While undoubtedly there will be changes made to the proposed reforms, regardless of the final details of any opt-in or opt-out provisions, perhaps these tips will add value as you consider your client review process and prepare your business for July 2012 and the implementation of the new regime.
Rod Bertino is a partner and director of Business Health – www.businesshealth.com
