Half of IFAs only contact clients once a year

Half of IFAs only contact clients once a year

Almost half of advisers only contact their clients once a year regarding their investment portfolio, meaning that investors have little or no idea how their portfolios are doing, according to online platform Rplan.

The online fund platform commissioned Citigate Dewe Rogerson to interview 115 UK IFAs during March, and found 48 per cent contact their clients once a year to talk about investment portfolios, 37 per cent on a quarterly basis, 5 per cent get in contact every six months and another 5 per cent do so monthly.

Stuart Dyer, Rplan’s chief executive, commented that if investors have little or no idea what their portfolios are doing, then they can end up losing many thousands without realising it.

Article continues after advert

“Portfolios should not be tinkered with too often – investment strategies require long term perspectives – but in today’s volatile markets things can go seriously wrong pretty quickly.”

Rplan has introduced a service whereby clients are sent monthly emails to update them on how their portfolios have performed in percentage terms, any changes in the level of risk and the level of charges.

Responding to the research, William Hunter, Hunter Wealth Management director, told FTAdviser that depending on the level of service agreed with clients, his firm updates clients between annually and quarterly.

“Some clients are happy with annual - looking at some clients funds too much can be like opening Pandora’s box.

“The important thing is to ensure that there is a structure to review the funds and diligence behind this on an agreed ongoing basis. We have a centralised investment research function that allows us to do this reviews in a disciplined manner and structured way every time.”

He added that there are advisers out there who might not see a client for years if there is no ongoing fee agreement.

Daren O’Brien, director at Aurora Financial Solutions, said that all portfolios are available for clients to view online, so they only design, print and send a specific client report every six months.

“We also see all our clients every six months with this full portfolio review at that time regarding their investments, the clients can automatically include a three monthly auto-rebalance if they select this at outset.

“As most investments are for more than five years I would say that anything more often that this is not necessary and might even be detrimental as it may encourage short-termism and unnecessary switches from a particular fund that might have a short-term blip.”

Jonathan McColgan, chartered financial planner at Combined Financial Strategies, said there were four main reasons that annual reviews remain the norm in the industry rather than more regular generic portfolio analysis.

Firstly, since the Retail Distribution Review more contact or services in effect mean clients will end up paying for more of their adviser’s time, secondly online technology makes it easier for clients to keep track of the value of their investments.

He added that by having an official investment proposition, due diligence is easily demonstrated to clients at the start of the relationship and updates can be provided as regularly as needed, and finally one of the main reasons that clients appoint an adviser is so they do not have to deal with this overload of additional information more often than they need to.