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What’s the plan?

Robert Burns told of “the best laid schemes of mice and men” going awry at the hands of unforeseen circumstances. It is impossible to account for every eventuality in life, particularly in the world of investment, but employing a detailed plan that considers numerous variables is the best way to ensure these schemes come to fruition before they “gang aft a-gley”.

Financial planning is an ongoing debate but while investment strategies and product preferences are seemingly inexhaustible topics, less attention is given to the logistics of creating the perfect plan.

It is no surprise that financial advisers would rather avoid chatting about spreadsheets and administration over a beer but establishing a financial plan for clients is of paramount importance to ensure the success of the delivery and subsequent results.

Scouring the marketplace for clients or, quite often, reconnecting with existing clients, is an integral part of establishing a firm foundation. Only then can advisers embark on their fact-finding mission. This fact-find needs to be carefully planned and executed, establishing as much information about clients as possible to help to ensure they reap the benefits of the best possible returns.

Analysis of this information must be a bespoke process, whereby customer goals are established. The conclusions then need to be shared with the client, ensuring they detail what life looks like, what they would like life to look like and how to make it happen.

Clients are most interested in the buying and selling stages but it is equally important for advisers to explain the planning process to them and, in particular, ensure they have a good understanding of the overall investment strategy. How are we going to increase the chances of hitting the target?

A good relationship with the investment manager is an integral part of ensuring communication with clients is as well informed as possible. Advisers need to regularly check in with fund managers to ensure they are in the best position to deliver their clients’ objectives.

An underlying question for advisers throughout this process is whether or not to outsource. A regulatory focus on the construction of advice means outsourcing is becoming increasingly popular – and in some cases, necessary – but this means the cost is also increasing.

Some advisers might want to outsource the analysis of risk assessment to a risk tool provider or investment management but will choose to remain off-platform to keep costs as low as possible. In fact, searching for customers in the first place is the only stage that cannot be outsourced.

Advisers using their own skills when it comes to gathering, analysing and reporting customer information is the best way of ensuring clients receive bespoke services that will see them reach their investment goals.

Communication throughout this process is imperative because this will ensure clients have a good understanding of how their money is being invested and, ultimately, how close they are to achieving their goals.

Advisers have a lot to weigh up in the financial planning process, not least how best to communicate investment performance to their clients, and which parts of the process to outsource.

However, the most important part of delivering a successful plan for clients depends on having a thorough plan in place – one which understands client needs and establishes how best to meet them.

Andy Brown is investment director at the Portfolio Management Group at Prudential


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