Sheriar Bradbury, managing director of Bradbury Hamilton, explores central service propositions and warns switched-on clients won't pay for second best…
Once again, that time has come when we reflect on what has happened to us over the past 12 months and make resolutions for the New Year.
But while losing weight, getting down to the gym, saving money and drinking less tends to top most people's lists, those within the financial services industry may be looking at slightly different goals for the upcoming year. For there's no denying that 2013 has proved a rollercoaster year for advisers.
The introduction of the Retail Distribution Review (RDR) at the start of the year heralded a whole new landscape for financial advice and advisers have been forced to fit in or face the chop.
Why central service propositions are a business essential
But - as with most changes - there's a teething stage and we're far from through it.
Let's not forget there's a huge difference between old-style advisers and the new approach and this has unsurprisingly caused issues. Most firms will have been in existence prior to 31 December 2012 and will therefore have a way of doing things that isn't necessarily compatible with the new rules.
In my opinion, there are a lot of firms who will be unsure of their exact service proposition and have come to rely on the old favourites "we're available around the clock" and "we will review your portfolio regularly."
Just how valid these are, however, is another matter. In reality, some firms fail to service their clients but with RDR raising awareness of this matter, clients are fast becoming more switched on as to what they can expect.
Service propositions which involve ongoing fees must have a defined service proposition with ongoing service requirements. This is particularly relevant for networks and those IFA firms with a large number of advisers who are likely dealing with a number of different service propositions.
Those firms without a central service proposition for their clients and who rely on individual or appointed advisers to implement their own will could have trouble demonstrating how they monitor the service they offer.
What happens if the service promised by an adviser is not continued because that person has left the business? You can bet your bottom dollar the customer-agreed remuneration is still being received by the network. But if this is the case, the client should have a right to at least a refund of these costs. After all, what are they paying for exactly?
Who takes responsibility if the promised review of the funds has not taken place and, as a result, the clients invested funds have not performed as well as anticipated?
Growing numbers of clients will want to know what they're getting for their money and my gut feeling says we are likely to see more and more clients becoming aware of their entitlement to compensation – and quite frankly, who can blame them?
Networks will understandably find this a lot harder to implement than a normal IFA. But if they don't, they are likely to run into big problems and their reputation will suffer enormously.
I think advisers will be forced to become much more commercial about what they are paid for and the service they provide if they are going to survive another year in the industry.
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