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Key communicators

One year after the launch of the Retail Distribution Review and financial planners may need to spend 2014 finessing their business models. Deciding on the best way to provide integrated private client services should be a part of this process.

Under one roof

For the past year, Mazars Financial Planning has made a concerted effort to make better use of its existing in-house resources to serve private clients. Although the firm already had tax and trust experts, trust lawyers, people who could write wills, financial planners and investment managers under one roof, these specialists tended to work in silos. "Since January 2013, there’s been a change of viewpoint. It’s not about what we do but about what the client wants," says Ian Pickford, advisory services director at Mazars Financial Planning.

"We work much more closely together in teams. Meetings with clients are always led by a client relationship manager who brings together all the relevant people, whether an investment, tax or legal solution is required. Then the team agrees who is doing what in front of the client so there are clear lines of responsibility," he says.

Many firms will not have the resources to offer the whole range of private client services in-house. Pickford says this isn’t necessary as long as firms have good partnerships. "Good communication lies at the heart of everything," he says. FF&P Wealth Planning, for example, provides wealth advice and investment solutions in-house, but uses a ring of external specialists for other advisory services. The adviser’s role might be to accompany the client to a meeting with a lawyer to sort out his wills and powers of attorney or for trust planning work.

Alternatively, the adviser might act on the client’s behalf in selecting an accountancy firm to handle company year-end dividends or directors’ loan accounts. These services are all paid for under the client contract. "Sometimes a client’s affairs are complex and they need a top lawyer or accountant," says Richard Bertin, managing partner at FF&P Wealth Planning.

"There is the potential for conflicts of interest if an adviser feels he has to use the firm’s internal resources even when it might not have the right person for the client."

Integrated investment solutions

In 2007, FF&P Wealth Planning began developing an integrated planning and investment solution, rather than referring clients to discretionary fund managers (DFM). This model provides transparent costs, and prevents any gaps in responsibilities for the ongoing suitability of investment advice between the IFA and DFM, an area of concern for the regulator. "We have an annual review process that ties the client’s circumstances into the investment process so we can take responsibility for it," says Bertin.

Integrated investment solutions may also help to demonstrate how advisers add value, according to Bertin. "When clients need access to money held in an investment fund they may be unsure whether to talk to their IFA, who they have a relationship with, or the DFM, who has their cash," he says.

"If the DFM becomes more responsible for those decisions then the long-term effect is that the IFA becomes disenfranchised," says Bertin. "The client thinks ‘I’m paying the IFA 0.5% per annum to choose my DFM, but it’s the DFM that’s managing my money – am I paying double fees?’"

Future opportunities

Both firms will continue to review the services they offer in response to client demand. Mazars now has the ability to manage cash for clients as part of a portfolio or on a cash-only basis. Meanwhile, FF&P Wealth Planning is now integrated within a family office that has its own trust company, so it can provide trust advice and do basic tax compliance for clients.

With trust in private banks at low ebb, both firms see opportunities to expand the services they offer to high-net-worth clients. "Most clients don’t want to go to too many places to get their advice. They much prefer going to one person who they trust. Bringing everything together creates a lot of value," says Pickford.