Ian McKenna: Offering advised clients the best of both worlds

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Investment sales data released by the FCA in December showed that non-advised sales exceeded advised for the first time ever. This makes True Potential’s recent announcement regarding the addition of a client self-service option to its adviser websites particularly timely.

The new service will enable firms to put forward a hybrid proposition that will deliver personal advice when the client wants it but also accommodate those who might want to manage some smaller investments themselves. If an adviser does not want to offer the self-service option to clients they can turn it off.

The client overview page has been given a significant refresh. It now opens to show the client’s total wealth and a breakdown of investments. In selecting the Wealth Platform the client is taken to the goals they have previously identified. Performance towards any goal is now shown as a default view and then a range of further charts can be selected.

The service includes a clear indication of current value and any gap in contributions needed to put the client on track to achieve certain goals. It also identifies the potential impact a lump sum would have.

For those that simply want to invest money as a lump sum, a quick invest option is included without the need to set a goal. Alternatively, users can choose the Plan & Invest option, which aligns more closely with an advice process.

To start, the client cites a goal to personalise the way they think of the money. They then choose how much they need to achieve as savings and when they need it by.

At this point, future income and lump sum calculators have been added to help the client identify how much per month they will need to save in order to hit the prescribed amount. It is possible they might not immediately be able to invest enough to achieve their goal but it is important to identify what they can currently afford, so they can be encouraged to make further savings over time.

Clients can now set up new accounts rather than just increment existing ones as they could previously. Investments can be made in a stocks and shares Isa, general investment account and the True Potential personal pension. The system will automatically check maximum contribution limits and other Isa or True Potential Wealth Platform contributions in the same tax year to avoid accidental mis-investment.

After selecting the tax wrapper the client then chooses which funds they want to invest in. Funds are guided towards the True Potential range as a default but advisers can configure their systems to offer alternative default options if they so wish.

Clients can also create their own portfolio using the wider range of funds available on the True Potential Wealth Platform. These can be filtered by level of risk, fund manager, performance level of fees and asset allocation.

After fund selection the system replays details of the investment set up, including amount and term, level of initial and/or regular investment and the type of investment account. The projected progress to goal is also illustrated. The client can choose to allocate assets from existing plans or fund the goal from new investments.

A confirmation page will confirm the amount of commission that will be payable, this being an execution-only transaction rather than advice. The adviser will have pre-selected what they wish to charge. Contributions are funded by debit card.

This establishes the investment and plays back a successful transaction. The adviser is notified of the self-directed transaction the client has set up, so they can factor it into any wider financial or tax planning exercise.

Some advisers may be uncomfortable with this approach but if it is what clients want to do, then the risk of not providing the options must be losing some investments to the likes of Hargreaves Lansdown. Offering an execution-only capability can help advisers maintain an overview of all a client’s affairs.

Ian McKenna is director of the Finance & Technology Research Centre