By Nathan Fryer
Because it had been almost six months since the last Powwow Down South 2015 – and nine months since the national powwow – it was high time for another Powwow Down South to gather. And so it did – on 21 July, hosted by Seven Investment Management’s London office.
Following Powwow (un)convention, in advance of the Powwow, participants were invited to vote for the topics they would like to discuss.
The two topics that topped the follow were Reports, Reports, Reports and The Review Process. Powwowers were divided into two tribes and set about getting their tomahawks into the subjects.
Reports, Reports, Reports
Alan and Dan led this session which was inspired by the recent guidance from the FCA’s Rory Percival about what should (and shouldn’t) be included in reports.
Essentially powwowers concluded that the FCA was looking for documents that serve the client rather than protect the adviser or company.
Keeping it brief: Possible areas where reports could be shortened were:
– Informed clients might not want or need to have all details explained each time, case by case.
– Presenting generic sections such as Centralised Investment Process within separate documents
The overall conclusion was that, while there are areas for rationalisation, the bulk of what the group included within reports was essential, and the focus should be on how to make contents more compelling using techniques such as sign-posting and colour navigation tabs.
Improving our reports: Powwowers recognised that it is good practice to regularly review your reports to check if you are using jargon that is unlikely to be understood (or necessary).
It’s hard to break the habit.
One company had involved marketing professionals – from outside financial services – to ‘story-board’ the structure of their reports.
Although the charges should be disclosed prior to any work being carried out, the general opinion was that it is good practice to also state the charges within the suitability report.
Tribe members felt that it would be great if we could get some sort of standardisation – across all providers – when producing illustrations because these are one way in which charges are communicated.
This would include: the consistency of growth rates; assumptions about fund costs and adviser charges; accuracy and methodology of projections; and presentation. Clients rarely understood negative real returns without the use of cash-flow modelling.
Using a clients own words within reports was cited as a good practice and helped demonstrate to the client that you really have taken the time to listen to want they want.
Powwowers also talked about ways in which advisers could best communicate this from the client to the paraplanner. Some examples shared were:
– Debrief the paraplanner directly after client meeting
– Use of dictation software to capture immediate post-meeting feedback
– Paraplanners attend the client meeting
In summary the sessions concluded that reports needed to:
– Be personalised to the individual
– Use an executive summary
– Kill all jargon
– Use white space
– Use signposts
– Use appendices
– Use pictures – where possible – to help engage the client
And all while still including the items that were deemed important to retain.
I’m reviewing the situation
The Second session set about tackling the issue of ‘The Review Process’. John Redmond and I hosted this session.
Annual Reviews: The session began with a conversation about how firms go about carrying out their annual reviews. The consensus was that some information and/or questionnaires should be sent to clients ahead of any review in order to be able to get the most out of the meetings.
Some powwowers agreed that it was sometimes a challenge to get the client to engage prior to the review with the client preferring to address everything at the meeting, which can make the session a lot longer than necessary.
One powwower said that, until the client had completed any documents prior to the review, they would not get an appointment.
The consensus was that review meetings were a huge opportunity in terms of new business. By revisiting the fact find you could find out about changes in circumstances, which may have an impact upon the plan, such as marriage, divorce, children, moved home, changed jobs, salary increase, recent inheritance.
Reviewing the risks: We also discussed how often risk profiling should be carried out, some did it annually and some not so often as clients were given the option to agree whether or not they deemed themselves to remain at the same level as before.
We questioned this approach as a number of contributing factors can affect the level of risk a client needs to take. For example, if the clients objective is to save £30,000 for their child’s university fees and they are already up to £25,000 with 3 years to go, the client may not need to take as much risk as they were!
The feeling was that both Voyant and Truth take quite a while to input the various bits of information but the output was great – although it does need to be explained to the client. Moneyscope is a much simpler cash flow tool, can be produced in minutes and is relatively simple for the client to understand.
With most of these tools, there is a general assumption with most of these tools that any surplus income is invested which we questioned and agreed that during the fact find we probably need to extract more information from clients in terms of their discretionary spending habits.
Powwowers also talked about the demonstration of capacity for loss through the use of cash-flow planning tools – something which ties in nicely with making reports more engaging for the client.
We discussed the fact that most cash flow planning software assumes linear upward returns whereas in reality markets almost never act like that. There was mention of Abraham Okusanya‘s study on Pound Cost Ravaging was touched upon and we noted that most people might factor in a market fall in one way shape or form to highlight the impact of any market downturn.
All in all, many of the powwowers had a process in place for reviews and I would hope that everyone took something away in which they could implement within their own businesses.
Question – tell me what you think about…
After the two main sessions, we opened up the floor to questions where a number of topics were discussed. The two big questions that interested powwowers were:
Do adviser firms do Tax-Wrapper asset allocation and if so how do they go about re-balancing?
– The general consensus was that not many of the firms did this as you can end up having huge capital gains within a GIA meaning that you were unable to move the portfolio to the more tax efficient ISA vehicle at the beginning of each tax year.
– The whole process also made the practice of rebalancing a nightmare.
How are firms going about finding new paraplanners and what was their appetite to go to Universities and Colleges to talk about what we do?
– Participants agreed that finding good paraplanners was getting harder. Some members had been searching for seven months or more.
– Firms had tried taking untrained people on, only to find that the simply didn’t have the time to train them or, if they did, that you have to do a lot to retain them due to the demand.
– One participant had recently joined an adviser firm directly from University and agreed that the Paraplanning was not something he or any of his friends had heard of before he had discovered it.
– Alan Gow said that we need to be looking outside of the traditional subjects that people might target like economics and accounting admitting that his own education was science.
– The group were generally enthusiastic about helping grow the awareness of paraplanning and it was suggested that we might like to start visiting universities and alike to help with the current shortfall.
How for now…
I really hope that powwowers enjoyed the morning and took something away. The way tickets sell out so fast for these events is testament to everyone who takes. Powwows are all about the people who take part.They belong to the paraplanners that turn up events and – while a bit of work goes on behind the scenes – it’s alway interesting to see that Powwow organiser don’t pipe up too much during the sessions: the events are genuinely ‘by paraplanners for paraplanners.’
Thanks also go to 7IM, who allowed us the use of their office space and laid on refreshments and lunch – and they didn’t even ask to do a sales pitch to the room!
We look forward to seeing everyone again at the national Powwow in September and let’s carry on sharing best practice.