Alasdair Walker, a chartered financial planner at Handford, Aitkenhead & Walker tells Damian Fantato about what he learnt when he updated his firm's annual review documents.
"I recently looked back at our file server which goes back about 12 years and I found an eight-page planning review document. It was mostly a load of prose about investment funds.
I reckon we did one page of intuitive financial planning - getting to grips with what the client wanted, thinking about how we could help them - and then we wrote seven pages about investments.
In about 2015 I had a lightbulb moment and I thought ‘maybe this isn’t what clients want’. I started hearing about goals and objectives and financial planning.
But we loved charts. We loved tables and we wanted to talk about planning and objectives.
For all of that passion and input and process that we followed, suddenly the financial planning report was at least 15 pages long.
We had a list of important documents but it was at least five documents long, so which one was important? So something needed to change.
My understanding is basically the regulator has a requirement to just reconfirm suitability. The regulation is so far behind the concept of financial planning.
You’ve got the overarching consumer duty principles, so if you were saying something patently wrong or misleading then that might bite you, and it is in your interest to be accurate and fair but there is an awful lot of latitude in how you define what your ongoing service is.
Now our financial planning review is usually around five pages. It has one real, human digest of our hour-long conversation. What we thought was important, what we thought was interesting. That is written by the planner, by a human being
It is followed by four pages of what we think are the important things that will move the needle for their outcomes, for the things that matter to clients.
We were getting really excited about inputs and how we could help, and then you have this realisation that clients don’t care about the inputs or the process. They are paying us to do that. It is our job to care about that. They want to know about what matters to them.
I have never had a client ring me up and spend 15 minutes on the phone telling me how amazing something we sent them was. That happened the other week when I sent it to a client.
We very often deal with a client couple. One member of that couple is the person that engages with us and the other member of the couple tends to come along dutifully, to sit and have a coffee and have a chat but never really engages.
So we have set ourselves a test of saying to both people in the room that we need to know they are both getting out of it what they need.
The feedback has been really positive. We’ve engaged more with the people who were disengaged and the people who were engaged are happy too.
The thing that makes me proud of this is the last page which is a nice big action plan. What needs to be done, by who and when. Stuff we need to do, they need to do and a section for notes. That’s the bit the clients like the most.
I think we are getting better engagement on the issues we need engagement on.
A classic one is when you need to think about your estate planning, like a will. You can say the same thing five years in a row and not get action.
When we replaced that with a section which is bright red and an according action plan, that resulted in noticeable upticks.
I have some particularly detail-oriented clients who want more information, and the 5 per cent of people who want that now still get it, but the 95 per cent who just want the answers are no longer being provided with that.
Feedback is really important. Up until this point we were mostly just guessing what clients wanted. This was the result of dealing with 10 or 15 of a stratified sample of our clients and getting their feedback.
I had to keep thinking about that old phrase about writing a shorter letter if only I had the time. We had to put the time into this to make it shorter and more succinct.
You have to be prepared to kill your sacred cows. I really liked those financial planning reports with the charts. I couldn’t understand why someone wouldn’t want to read a nice Voyant output with the bars and the colours and the charts.
I went to the clients I thought were most likely to tell me that they wanted to read those and all of them said I could drop that bit. They said they liked it in the room when we were talking but they said they didn’t need to read it afterwards.
There is always more to do. I don’t think that this will be in the form that it is. It mostly goes out via PDF in a client portal. I’d like to bring it off the page a bit. I’ve seen interesting innovation in this area.
There’s a company called Hundreds and Thousands which provides their reporting in video form with an AI woman reading it out.
For the first page, which is a very conversational summary, it would be great if the adviser could do a two min video to camera and offer it as an option in the letter."
