Or…how to avoid awkward silences at your annual client reviews!
Author: Paul Hogg, 8AM Global
Having to ‘wing it’ at any stage during a client review meeting is, at best, a bandwidth killer, a thief of mental energy. At worst, it’s a commercial and regulatory risk.
That said, the financial industry doesn’t ‘wing’ anything en masse.
The structure surrounding the provision of information to clients has significantly improved over the last 10 to 15 years, both in clarity and in utility to clients.
But without question, there are gaps.
It’s the ‘light’, casual question that you can get caught out by:
- What has changed since April?
- How did you react when X happened in October?
- How are they seeing the next six months at Insert-Investment-Manager-Here?
Not that these questions can’t often be answered by your average fund manager quarterly flip binder or MPS factsheet, but the point is twofold:
- They can’t always be answered, and
- Data produced by managers goes out of date…instantly?
Information is locked in at the point of production, and that could have been months ago.
And it’s a darn sight more useful to you, as an adviser, to have a 12m rolling lookback that is accurate on the day you need it.
Every decision documented and explained clearly.
The outlook current to within days, not quarters. Contributors and detractors laid out so you can explain not just what happened, but why it happened – and what we did about it.
What’s often missing
We’ve been writing investment reports and commentary for some time now, and one of the things we’ve noticed is the amount of review prep time that is spent on small enquiries that should be answerable by automatically produced documentation.
This is never the big stuff. The valuation, the performance, the yield. The must-haves.
It’s always the conversation – the colour and context – around the numbers that, if you don’t have it prepared, can create the need to fill in the gaps; but if you do have it to hand, the transparency and attention to detail it demonstrates can go a long way in cementing the trust of the client.
What’s in it?
- Rolling 12-month window – always current
- Full timeline of every portfolio review decision in the period, in chronological order
- Plain-English rationale for each review – what changed, why, and how many switches or adjustments were made
- And why things didn’t change! Most providers tell you what they did. The decisions not to act are often the better story, and the harder one to explain on the spot.
- Contributors and detractors section – what worked, what didn’t, and the reasoning behind both
- Asset allocation comparison – where the portfolio was 12 months ago versus today, across every risk band
- Sector scenario log – which sectors were moved to Defensive, when, and when they returned to Standard
- Forward outlook – a probabilistic view into the next two quarters, by region and asset class
- Cumulative performance data across 1, 3 and 5 years, every risk band shown against its benchmark sector average, with the difference, and a plain-English glossary of key terms for use directly in client conversations.
- Produced monthly – not tied to a fixed quarterly or annual production cycle
In simpler terms, most meeting collateral tells you what has happened. That’s a given. This tells you what to say, and facilitates you doing so in a way the client understands.
Standing out
Now, we wrote this piece last month, evangelising about what true differentiation in MPS is, nowadays.
When everyone is buying from the same shrinking pool of funds, service is where the difference shows. But technology has afforded us a generational opportunity to do so, and a large part of the battleground is covered by service, both how it is provided and evidenced at individual client level.
An adviser powered with a review document produced on the day of the meeting has at the same time satisfied the client’s modern expectation (however subconscious) of personalised service and the regulator’s stipulation that individual outcomes are evidenced, and that information is relevant and clearly explained (and thus understood).
Every decision is documented. Plus, for those clients who actually ask (they do exist), you’re clear on the forward view of markets (the above-referenced light questioning that can trip all but the most informed advisers up).
Have you ever walked out of a review meeting or perhaps come off a client check-in (ambush) call wishing you had more to work with when explaining the investment side?
In our humble opinion, this is a highly useful solution.
See a sample 12-Month Adviser Review below, or ask your account manager for one personalised to your client before their next review.
This content is intended for financial professionals only. These are the author’s views at the time of writing and may be subject to change. This content is not intended to provide the basis for any investment advice or recommendation. Any forecasts, figures, opinions, tools, strategies, data, or investment techniques are included for information purposes only.
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