Apr 12 2016

Getting top service for your clients

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      CPD
      Approx.30min
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      CPD
      Approx.30min
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      pfs-logo
      cisi-logo
      CPD
      Approx.30min
      Getting top service for your clients

      In 2005, there was no truly independent rigorous measure of provider service in the market.

      It was clear as products became more homogenous in terms of product features, there were fewer differentiators advisers could use to select products for their clients.

      Price was also becoming more important and, moreover for intermediated business, service issues, so this is why, 11 years ago, Defaqto first included its own service rating in its Engage database.

      In recent times service has once again become an important factor for advisers as, since the Retail Distribution Review (RDR), there is a renewed focus on evidencing the product and services selection process and proving that it is suitable.

      The FCA’s Thematic Review TR16/1, Assessing Suitability: Research and Due Diligence of Products and Services, published in February 2016 reports on how well advisers are meeting their obligations in this regard.

      The review considered how advisers review the market and ensure they recommend suitable solutions for clients with reference to: how firms selected products, funds, platforms and discretionary investment management services; how they created panels and centralised investment propositions; and how they considered options for individual clients.

      Firms sometimes did not consider some options available to the client because they were happy with the existing provider’s service

      The expression, research and due diligence, is used to refer to the process whereby advisers assess the nature of an investment, its risk and benefits and the suitability of the provider.

      Among the many findings of the review, there were some related specifically to service. First, it found there were conflicts of interest between the needs of the client and those of the adviser.

      In some cases firms placed the level of service they received as a key factor ahead of the level of service received by their client.

      Second, although the report acknowledges service is an important factor, firms sometimes did not consider some options available to the client because they were happy with the existing provider’s service.

      The review also touched on what information advisers can reasonably rely on from providers. Factual information can be relied on, for example, asset allocation data; whereas opinion may not be relied on, for example an investment’s risk level.

      These findings make interesting reading in the light of the latest pensions service study from Defaqto and help to make sense of some of the results.

      In the study we measured the service of providers against eight satisfaction disciplines:

      • Provider perception

      • Staff perception

      • Product and proposition

      • New business servicing

      • Existing business servicing

      • Retirement settlement servicing

      • Online servicing

      • Value added services.

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