The latest World Wealth Report from CapGemini, in association with Merrill Lynch Global Wealth Management, contained some interesting findings about what clients want from their financial advisers.
Here at Informed Choice, we have considered each of these findings in turn to see how we measure up to the requirements of individuals classed by the study as High Net Worth or Ultra High Net Worth.
We believe similar requirements are demanded by the majority of IFA clients.
Investors want to be more involved in their investment choices
This suggests that an advisory rather than discretionary approach to investment management is preferred. This approach to investing fully engages the client, because before any changes can be made to their portfolio, their approval must be obtained by the adviser.
An advisory approach also enables the investor to carefully consider the advice before taking action. With discretionary investment management, any reflection must happen after the event.
Here at Informed Choice we operate on an advisory basis.
We do work closely with a select number of discretionary fund managers, for use with clients who prefer this approach for part of their portfolio, but typically we find that investors want the control associated with an advisory approach to their money.
They want more specialised advice
We have no doubt that there has been growing demand for more specialist knowledge and advice in recent years. As a firm, we have embraced the importance of higher level professional qualifications, becoming the 99th firm of Chartered Financial Planners in 2007.
Clients want to know that their adviser has demonstrated their technical competence through professional examinations. This, combined with experience and good standards of ethical behaviour, is what makes a professional adviser.
They are demanding full product disclosure and transparency
Transparency is a very important part of our philosophy and has helped us ensure that our clients have avoided opaque investments in recent years, including private finance, hedge funds and structured products.
We deliver full product disclosure by putting our advice in writing and sending this to each client before it is presented, giving our clients the opportunity to scrutinise any small print and understand our recommendations. We always invite questions when we present our advice to ensure that our clients fully understand what we are recommending.
They are more concerned about the downside risk
Our assessment of attitude towards investment risk, reward and volatility forms a central part of our recommendations to clients. We need to know a lot about how our clients feel about risk before giving advice.
We further strengthened this assessment a number of years ago by introducing a more robust psychometric risk profiling questionnaire which we use with every client. This is combined with our Financial Planners taking the time to understand tolerance to risk before a recommendation is made.
They are validating advice through other sources
In recent years we have seen client use of Social Media increase rapidly. This is becoming an increasingly important way in which our clients find information, get answers to their questions and obtain referrals to trusted professionals.
We always encourage people to get a second opinion on advice they have received, if they are in any way unsure about its suitability. In fact, over the past twelve months we have acted as a ‘sounding board’ to clients on several opportunities before they have taken action on advice from other sources.
They want products they can understand
We actively avoid unnecessarily complex financial products and investments. If we are unable to easily understand a financial product and explain how it works to our clients in plain English, it has no part in our toolkit.
They want improved client reporting and more frequent updates
We take pride in the frequency and quality of our client communication. During the credit crunch and global financial crisis, it was natural for us to continue communicating to our clients when some of our competitors were instead choosing to avoid answering awkward questions.
All of our clients receive an annual written review report as a minimum, with many receiving this level of reporting half-yearly or even quarterly. We also encourage every client to receive our free weekly email newsletter, which contains important financial news, views and opinions.
The CapGemini World Wealth Report always makes interesting reading and, as a benchmark to which we can test our own proposition, we enjoy confirming that we are delivering what clients want.
Our thanks to Steve Billingham for providing an excellent summary of the main client requirements contained with the World Wealth Report.
