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The Personal Touch approach to quality control

With membership fees based on the standard of advice given firms have a renewed focus on quality of business, not quantity

In common with other networks, Personal Touch Financial Services monitors the quality of advice given by its member firms. The traffic light system of red, amber and green it uses to rate member firms along the spectrum of low to high quality advice is a long-standing part of its monitoring process. Until February this year,this process had no bearing on the fees member firms paid for PTFS services.

But with the costs of professional indemnity insurance rising, Personal Touch decided the best way to ensure all its members paid their fair share and to incentivise higher quality advice was to follow the pricing model of the insurance industry, where the greater the risk the higher the cost.

PTFS sales & marketing director David Carrington says: ”If the advice you give is of low quality there is a greater risk to the business of complaints. And if a network has lots of high risk firms professional indemnity insurance is harder to get. We don’t want a situation where low quality advisers are being subsidised by those giving high quality advice. It has to be fair to everyone, otherwise people resist it,” he says.

Linking the quality of advice given directly with the fee structure was not something PTFS could do unless its member firms understood and bought into the rationale behind it. “It’s not just about what firms pay us. It puts our monitoring process under greater scrutiny,” says Carrington.

”The initial incarnation of it looks at advice quality. We monitor the quality of advice through a series of measures but the most obvious is file checks. The member writes business and that sits in our toolbox. We sample a proportion of those cases and allocate points for different events – the fewer points you accumulate the better. If a file passes first or second time there are no points. If it passes the third time or it fails we attach a number of points to that event. Every quarter we average the number of points across a firm, otherwise a firm of 10 registered individuals would have more points than those with one RI. The points system defines whether a firm is red, amber or green and that determines the fees.”

There are two elements to the fee structure at PTFS. A fixed fee covers the basic services it provides for members and there is also a variable element where it retains a percentage of the commission they earn.

“What is different about us is that we reduced fixed fees for all members by 17 per cent. We also said retention rates would remain unchanged for green firms, but there would be a small increase of 5 per cent for amber firms and a 15 per cent increase for red firms to reflect the fact that it costs more to monitor those businesses. What we’ve also said is that pricing at the beginning of 2016 will also include complaints and breaches, giving members a year’s notice to make sure they are comfortable with what is being measured and how that is reflected in the fees.”

Carrington says its members are now more focused on quality of business rather than quantity and that this dynamic changed almost within days. “All conversations with amber firms are about how to get to green. A year ago the conversations were around how to win more business,” he says. “We know that 83 per cent of our members are paying less this year than last year.”

Carrington says the network has also introduced an electronic client feedback system to “tidy up a whole series of manual processes that existed”. 

“We have members who have gathered client feedback at the end of the advice process but one of the challenges is that they all did it in slightly different ways. They couldn’t interpret this information without a huge amount of work – they would have generated email or paper responses so someone had to sit down and make sense of it all. We take an electronic approach which we administer centrally for our members,” says Carrington.

With the prior agreement of the customer a questionnaire comprising around 10 questions is sent out by email at the end of the advice process. Clients fill it in, giving their experience marks out of five and send it back for PTFS to collate.

Carrington says: “Client responses for individual firms are broken down by RI and the principal of the business gets a report. They can see who is strong in partcular areas and where there is a developmental need among RIs. We piloted it with a few firms from the third quarter of last year and are now using it with all firms. We expect thousands of responses.”


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