2plan in 'radical' client agreement re-think

National IFA 2plan Wealth Management is set to hand its 200 advisers what it calls a “radical” alternative to its standard client service agreements.

Its Personal Client Agreement (PCA) sets out in "plain English" to clients the business' charging structure and costs and represents, 2plan says, a new way of communicating with customers ahead of the RDR.

The document, currently being tested among a group of 2plan advisers, outlines the company's four-stage planning process - consultation, advice, implementation, ongoing service - and explains at which points the clients will be required to pay, how much and via which method.

In line with RDR requirements, if clients choose to pay via commission on products still offering it, the PCA explains although clients pay nothing to the adviser up front, it "does not mean the service is free". It adds this option will also "reduce the amount left for investment".

2plan says, for its advisers, the move will enhance the client relationship and enable them to make a "smooth" transition to the FSA's proposed adviser charging remuneration method, which demands complete transparency of advice costs.

It adds the literature was shaped following extensive consumer research, adding the Association of IFAs (AIFA) has also reviewed the document.

"Sadly many advisers have always seen the client agreement purely as a piece of legal documentation with little shelf life and an even smaller chance of being thoroughly read and understood," 2plan CEO Chris Smallwood says. "It is about time this changed."

Rather than "hiding everything in small print", 2plan says inspiration for the PCA came from putting the principles of TCF and RDR "uppermost" in its minds.

"We wanted to design a new way of communicating with clients which would not only increase their chances of understanding what an IFA can really do for them, but also to allow the adviser to build a relationship based on honesty and integrity from day one."

AIFA membership director Sophie Fiori says: "We are really pleased to see that 2plan is moving to a single reference document for its clients - one that clearly demonstrates both their independent status and their easy-to-understand fee charging structure and costs."