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Asking the Trigger questions

Specific questioning can help firms promote objectivity and deliver consistent end-to-end advice, particularly in the use of Centralised Investment Propositions (CIPs), says Steve Bailey, director, ATEB Consulting

Trigger questions? No, this is nothing to do with do with Del boy’s best mate, but a concept developed to help advisers deliver a consistent end-to-end advice process.

It is our firm belief that firms should have a clear and consistent pathway for advisers that defines how a client is taken from first contact to suitable solution. This is particularly important where a firm uses one or more Centralised Investment Propositions (CIPs).

We’ve developed an adaptable, structured investment process for this purpose which has been adopted by a broad range of firms and networks. The process includes trigger questions to bridge the gap between the client’s objectives and the recommendation.

Importantly for independent firms, this approach helps to demonstrate an unbiased and unrestricted process by narrowing down suitable solutions. It also lends itself to a consistent approach across the firm and decreases advice subjectivity.

So, what is a ‘trigger question’?

Let’s use an example of a firm that has two CIPs (say an in-house model portfolio and an externally managed DFM) but also provides bespoke, individually researched client solutions. How does the firm determine whether the model portfolio, the DFM or a bespoke solution best meets the client’s needs?

Well, there are obvious considerations, such as the Attitude to Risk (ATR) assessment; however, while this may eliminate very low risk clients from both CIPs, equally the same ATR could be used for all three options. You therefore need more specific questioning.

Perhaps the amount of the investment could point towards CIP 1 or CIP 2; or the client’s current investment strategy could suggest diversification; or the client may have a specific requirement such as tax planning, which may point towards a bespoke solution. All three are examples of trigger questions.

Other examples are:
• The need for guarantees;
• Minimum income requirements;
• The need or desire for ongoing reviews (clients should not be ‘shoe-horned’ into reviews without a discernible need);
• Investment timescales;
• A specific investment preference.

Should trigger questions form part of your fact finding? The simple answer is yes. You need this information as early as possible. Skilled advisers have excellent consultancy skills and one of the most important is objectivity. Pre-conceived ideas are a ‘no, no’. Trigger questions help to eliminate subjectivity and promote objectivity.

Advisers will defend themselves and say that ‘we’ve always done this’; our many years’ experience of the industry would suggest otherwise. It may be ‘in the head’ but is it written down?

Remember, FCA Principle 2 states that ‘a firm must conduct its business with due skill, care and diligence’.

In TR14_05 ‘Supervising retail investment advice: Delivering independent advice’, the FCA cites the following as good practice:

‘Firm N had a broad range of clients …… the firm had developed a range of services to meet the needs of the different clients …… and had undertaken appropriate due diligence on platforms to ensure it adopted the right ones for itself and its clients;

• It based the client segmentation on investable assets and, at the higher end it adopted a platform with a wide range of products and services. For the next category of clients, it adopted a lower cost platform and a simpler service appropriate for these clients. It also felt that it had some clients whose needs were simple and did not require routine ongoing services (but offered advice on a reactive basis). It worked on a transactional basis for these clients.’

These two points describe a firm that had segmented its client bank and had designed suitable CIPs, but also used bespoke solutions where appropriate to meet the diversified client needs.

The FCA then stated that:
• ‘The firm set out clearly which clients the services were most likely to be suitable for and it had processes in place to ensure that each client was considered individually and handled differently to the standard services where this was in the client’s best interests.’

This clearly points towards a defined process and a method (trigger questions?) of determining which service best suited individual clients.

Professor Steve Peters, one of the masterminds behind the success of British cycling, in his book ‘The Chimp Paradox’ explains that if you concentrate on the component parts of the process and do each component part well by looking for small, incremental gains at each step, then a consistent and high quality result will be an inevitable consequence.


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