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Offer clients an online service if they no longer want advice

In the FSA’s platform policy statement, published in August, the regulator warns platforms that they will have to carefully consider their “contractual obligation” to clients who decide they no longer require the service of an adviser. This presents advice firms with the challenge of adding additional transparent online servicing options over and above traditional advice-led propositions.

Just because a client no longer wants ongoing advice from their adviser does not mean the relationship with the firm has to be lost or that the platform must service the client directly out of obligation. If a client no longer wants ongoing advice, they should be allowed to access their portfolio reporting whenever they want and transact if necessary.

If platforms can accommodate this choice, this service can still be provided under the advice firm’s brand. The challenge is making it engaging enough for a client to feel it justifies a fee.

However, as many firms will use more than one platform and have client assets directly with legacy product providers, there needs to be reporting functionality wide enough to capture the broadest possible range of assets for a client to find the service useful. Simply reflecting what is on your back-office system does not suffice, as this typically represents a fraction of a client’s total investment and liability picture. If that client decides to no longer take advice, those assets can easily be transferred to discount broker sites such as Hargreaves Lansdown, where the cost of access to view and trade is cheaper.

In a world where the majority of online services are free, one that is charged for must deliver exceptional value. Simply reporting portfolio values alone is unlikely to be perceived as such by clients. For an online service to be appealing enough for a client to be willing to pay, it has to offer a new standard of usefulness and convenience, one that is simple and inexpensive to use. To achieve this requires a new generation of online portal that combines the reporting of client needs and wants and in so doing creates the everyday relevance necessary to make that client want to log in on a regular basis.

For example, most of us access our online banking at least twice weekly and the technology exists today to bring this frequency of visit and all financial accounts (no matter where they are held) under the advice firm’s brand. Once you have this, you can start to service the client profitably by encouraging further contributions and/or regular trading. This approach allows advice firms and platforms to profitably compete with the traditional online execution-only brokers.

Such portals require linkage and cohesion between platforms, providers, software suppliers and advice firms. In this way, the sharing of information will help meet client requirements, whether they are for advice or execution-only services.

Sim Sangha is business development director at Sammedia


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