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Is your client review prep killing your profitability?

Brett Davidson questions the need to produce anything other than a valuation and cashflow model pre the client review meeting

Firms looking to cut their overheads should look at what they are producing in preparation for the client review meeting – what they think they should produce compared to what they need to produce, argues Brett Davidson, chief executive of FPA Advance.

Presenting on profitability and productivity at the FPAdvance Practice Management Workshop in London, Davidson said: “If you think about the majority of your client reviews, nothing much has changed for the client over the year and the review meetings mainly are about reassuring the client that everything is going to be alright, that the financial plan is still on track to deliver the goals and ambitions they may have for their finances.

“At the same time, if you consider the amount of work that goes into producing a pre-meeting report, with input from administrators and paraplanners, simply to tell someone ‘you’re still on track’ then there is a good argument for simplifying the preparation work, giving the reassurance that the client needs and massively reducing the labour-intensive work and cost for the business.”

Davidson argued that if the client is on a wrap platform, producing a valuation off the platform and a cashflow model is all many client meetings may need in preparation.

“Producing a pre-meeting report full of data and charts and compliance material is killing your back-office because they are spending hours putting it all together when a simpler document produced post meeting might suffice. And if in the meeting you find something has changed for the client, they have to do that first report all over again. For many clients a valuation and a pre-prepared cashflow model, which can be used in the meeting to talk about their finances, is all that’s needed. Your team can then implement the changes and produce a relevant and suitable report post the meeting but doing the work only once.

“Rework – doing things more than once – can be a killer for your productivity and your profitability,” Davidson argued.

Clients with complex needs in their financial planning will require work done in advance, Davidson said, “but this means your administrative staff and the more expensive paraplanners are focussed on the complex and larger revenue earners for the business.”

Davidson cited one a firm that had adopted this approach and segmented its clients into three categories: Simple (no pre-meeting prep bar valuation and cashflow); Simple with a couple of issues (some pre-meeting prep mainly around those issues); Complex (focused pre-meeting prep).

“The complex clients were 5-10% of the firm’s client bank and the firm gets in touch with them pre the meeting to get a heads-up on any changes. By simplifying their process in this way, and focusing their time and effort mainly on this group of higher revenue producing clients, the company has saved huge amounts of money in terms of its productivity and so increased its profitability.”

Asked about client reaction to not receiving reports before the meeting, Davidson said: “You’ll probably find most clients will welcome it as they don’t feel obliged to wade through pages of paper themselves. You’ll find the meeting takes less time because the adviser is not going through the same pages talking to each one – there is a compunction to have to talk about the report if it is there in front of you – and it is more focused because the adviser is listening and reassuring rather than reeling off a bunch of facts and figures. Overall, clients often like the fact that it’s simpler and focuses on what they really want to know: Am I or are we going to be alright?”

Davidson added: “Firms that work in this way also find that when the squeeze is on a business for any reason, because they are not paying away on overheads and inefficiencies they are better able to ride out those periods.”

The FPAdvance Workshop is running in Knutsford, Cheshire on Thursday 26 March. For more information click here.

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