Better Business: Ditching client reports

By scaling down client reviews, advisers can free up back-office time to deliver more effective services, writes Brett Davidson, chief executive of FP Advance.

Providing ongoing reviews for clients is the cornerstone of any professional financial advice business.

While all of the advisers we speak to acknowledge this, very few have built a genuine review service that is truly proactive. Such a service would involve the firm ringing the client and saying, “It’s time for your annual review.” More often than not, lip service is paid to delivery of a review service, but it is the client that has to chase the adviser.

Let’s be clear about what does not constitute a review:

• Posting a valuation to a client;
• Half-heartedly calling the client for a review only to be told the client does not think they need one (who is the expert here?)

A proactive review service is not delivered because most advisers are still bogged down in a compliance mentality, not a customer service mentality. With TCF and RDR there is huge confusion around what must be done to justify receipt of ongoing remuneration, and many advisers have over-engineered the solution by promising quarterly reporting to their top clients and half-yearly or annual reports for others.

There are two problems here:
1. The reports are often time consuming to produce;
2. Clients do not really value them very highly. They have just been trained to expect them.

Add to this the fact many advisers are charging less than they would like to for their ongoing service and you have a major profitability problem. Rather than address the root cause of this problem, the usual approach is to revert to non-delivery of a proactive high-quality review meeting.

It is worth considering which parts of your ongoing review service clients actually value. After a face-to-face client review meeting it is the discussion with the adviser that holds most value, not the push-button report that was produced. But the bit that takes all the time is production of the written report.

One firm we know well made the decision to simply stop delivering any kind of reporting to clients. Staff were up to their necks in report preparation, running late with reports promised, making mistakes and having to re-do reports that had been prepared in haste. Most of the firm’s back-office time was being taken up with this job.

No warning was given to clients: it just stopped producing reports cold turkey and explained the rationale for the decision at the next face-to-face meeting or telephone contact. It was fully prepared for some clients insisting on receiving their reports and were happy to supply one if required.

And guess what? After a simple explanation that the firm had decided to focus more on personal delivery of their information, rather than via reports, no one insisted on receiving a full-blown report. In fact, most clients confessed they had never understood the reports anyway. Some asked for information that required something extra to be printed from the financial planning system or wrap platform, but these were exceptions. The result was a massive reduction in back-office work and an equally significant improvement in client satisfaction. They discovered that less is more at review time.

Once this time was freed up in the back office, the following activities could now be delivered effectively to clients:

Client seminars

Twice a year seminars are arranged for the client base with a guest speaker talking about topical issues (such as markets, pensions or taxation) and helping to reinforce the key messages of the business. This is a cost effective and high impact way of keeping clients informed. These are also ‘bring a friend’ events and the business gets to generate new work from simply servicing its existing clients.

Targeted newsletters

A generic newsletter is no longer sent quarterly to every client. Instead, targeted communications are sent to clear client segments with similar interests in the format preferred by individual clients (for example, email or post).

Lunch with ‘A’ class clients

Whenever an ‘A’ class client comes in for their annual review  – the major review of the year – the adviser asks them for some extra time to take them for lunch at a suitable restaurant. This provides an opportunity to really get to know the client, to continue reinforcing the adviser’s key messages and to dig a little for some high-quality referrals.

Corporate hospitality

During the course of the year some corporate hospitality is organised for key clients, key introducers and even some quality prospects. Not only is this fun but it generates business as well.

Being available

Finally, the business is now available when clients call and can address their issues in a less frantic fashion. This ensures clients feel genuinely well served rather than simply loaded up with reports and information.

The change in this business is huge: staff and owners do not have to work nights and weekends to keep up with their promises to clients; the workload can be delivered during normal business hours. The change has moved the firm back into the advice business and got them out of the ‘generating tons of paperwork’ business, which is a win for them and a win for their clients.