They made a presentation to our practice about their new super-duper policy management system. It would allow us to value all our clients’ holdings at the touch of a button, not just various funds, but also various types of products and different companies.
This all sounded wonderful, and then, the pièce de résistance – we could also be paid fund-based renewal on the overall value.
Hold on a minute, this was being sold to us IFAs as a huge time-saving benefit and we will also get paid for it? In summary, we were going to benefit massively from the time saving while also getting paid but to enable this to happen, the client would have to pay extra annual fees, which would, in many circumstances, double their annual management costs.
Remind me, what was the benefit for the client, above what, as IFAs, we were already giving them?
Now remember this was the early noughties and we were only just taking on board the new conduct of business rules, the current catchphrase was just a twinkle in the FSA’s eyes, but we could all see this was far from treating our customers fairly.
Hence, the reason as a practice and, I think, on the whole as a profession, we made the decision that this was not for us and continued to build our portfolios with numerous providers and even more numerous funds.
And then along came FundsNetwork. As a practice, we had already used Fidelity funds quite a lot. They had some excellent funds in important areas for our clients and their charging structure was among the most competitive anyway.
Initially, however, we were very cautious about this network as it gave us almost all of the previous advantages but without the additional cost the client.
How could this work? We tried it out on our own investments first and it did exactly what it said on the tin, and for that matter still does. Up to the minute valuations but, more important, a place where we could manage and view all of our clients’ Peps, Isas and unit trust/Oeic holdings under one roof, with online fund switches between funds and fund management groups without the delays involved in transfers.
Do you remember the hassle involved when you agreed with the client to transfer a Pep from one company to another? And the time delays. All the major fund management providers seemed to be supporting it as well and, much to our initial surprise, were encouraging us to use it.
Looking back now, it seems like we were working in the dark ages. Fidelity FundsNetwork has moved on and keeps improving since the early days. However, we realised very quickly that it was a winner and we have never looked back since. Without doubt, it has made a huge contribution to the success of our business.
Richard Loughton is director and financial adviser at Loughtons