At a recent conference the issues surrounding simplified advice arose and the key question that resonated was ‘Can it exist’? Likened to an Abominable Snowman, the industry seems to either be in awe or fear of this service proposition.
Firstly lets get things clear there is no circumventing the suitability or client best interest rules. Yet, if we remove the name allotted ‘simplified’ and begin with client needs, then we have a starting point for designing a service to meet those needs.
We also have behavioural economics that allows us to get under the bonnet for client decision-making and thus provide a nudge style strategy to ensure clients are engaged in financial planning and gain good outcomes.
So how can this be accomplished? Well it’s all about those client needs, and designing a service for a segment of clients, which involves digitisation and technology:
- Client Journey: Surveying clients and providing research into what they need. This showcases the behaviours (propensities, sensitivities, motivations) of the desired segment in question and level of access to information, steers needed towards potential solutions (Guidance) and finally advice that provides clear and relevant solutions.
- Systemised approach: With boundaries placed around the advice track, clear disclosure and client ‘hopper’ system in place, a focus on the best of the front office and back office and creating a ‘middle office’ or operational engine a simplified proposition can be designed to match client needs with products and people. Roles and responsibilities are crucial to the systemised track built to ensure seamless service and high quality client relationship management.
- Streamlined & automated process: By employing technology such as Skype and cashflow modeling with interactive online fact-finding & risk profiling, this allows the advice process to be compressed and thus provides efficiency and economies of scale.
- Product choice: The segmented clients and product suite can be matched by assessing client survey data and associated research. Due diligence process is key and mapped into the data management and operational practice to provide suitable products to meet the client needs.
- Compliance and risk: In their paper FG12-10 the FSA guidance on simplified advice provides a key steer around understanding and incorporating client behavioural traits into the process. Information disclosure is not enough.
Thus restricted and involving focused client interaction in design with systemised data management, means that suitability standards and client best interests are met. With the a fore mentioned boundaries, clear disclosure and hopper system built this means a clear strategy for those clients this service is and is not suitable or appropriate for.
The key to building a simplified advice service is to start with the client segment and their motivations, then build out the systemised track with boundaries, allocate right roles and responsibilities to ensure uniformity and clarity for all stakeholders.
The Yeti exists and although at first it may appear strange and a tad awkward, those clients for whom it is suitable for may just give it a big cuddle and thumbs up.
