Stop FoFA’ing around with fee disclosure statements

Adviser Voice
September 17, 2013 AEST

Many advisers may be living in fear of sending out a fee disclosure statement (FDS) to their client base over the next 12 months, as required by the Future of Financial Advice (FoFA) reforms, because they believe they will lose their currently disengaged, but valuable, clients.

“Disengaged clients probably represent between 10 and 30% of an adviser’s client base,” says financial planner and AstuteWheel client engagement platform director, Hans Egger. “Many advisers believe that when these clients realise what they are being charged, they will fail to see value and advisers will run the real risk of losing them as clients.  And as most advice businesses only make 10-30% net profit, they simply can’t afford to lose them.”

Compounding this problem is the fact that many advice businesses have been necessarily distracted with implementing the changes required by the new FoFA regulation.

“It’s taken a huge amount of time and energy for the advice industry to get its head around the reforms,” Mr Egger says, “but no matter what changes the new Government makes, consumer-focussed regulation is here to stay. And as advisers, that means we absolutely have to deliver value, we have to do the work our clients are paying us for – whether they are engaged or not. So it’s time to stop FoFA’ing around and get ahead of the game.”

Mr Egger is therefore urging advisers to start re-engaging with disengaged clients as soon as possible. “In this environment, we have to be proactive in order to remain profitable,” he says. “We have to demonstrate the value of our services well before sending the FDS. Leave it too long and it will simply be too late.”

The challenge, however, is how to engage the disengaged. “There’s no denying that trying to win over these clients is going to be difficult. We therefore have to make sure our approach is direct, simple and all about the client.”

Last year Mr Egger developed the AstuteWheel Financial Planner to overcome these kinds of client engagement problems. Launched with the support of industry marketing specialist and business partner, Michael Topper, the AstuteWheel includes a standardised suite of innovative marketing, pre-engagement and client education tools, as well as over 20 strategy modelling calculators, video emails, five-minute financial health checks, online fact finds and a plain English presentation What is financial planning?. Together these tools help advisers explain the value of advice to clients.

“The five-minute financial health check is a self-assessment questionnaire which reveals how financially healthy clients are across the six key areas of financial planning: income, investments, debt management, risk, retirement and estate planning,” Mr Egger says. “It helps clients recognise which areas need addressing and how urgently they need to be addressed.”

Information resulting from the completed questionnaire is delivered to the adviser electronically who can then appropriately prepare for the review interview.

Mr Egger recently put the health check to the test with disengaged clients in his own business. “I sent the video email to a group of disengaged clients I have in my practice. Despite the annual offer of a review I had not seen these clients for many years,” he says. “Since sending the video, 10 percent of them contacted me. They all came in for a review and they have all since signed on to an ongoing service agreement.”

Clients can disengage for a number of reasons, according to Mr Egger. “It may be that they are part of a book of clients you bought but never met. They might have moved interstate or overseas and found it difficult to visit your office, or they might simply not understand all you can do for them. The AstuteWheel helps overcome these challenges because clients can interact with it in their own time and place.”

Mr Egger says with the AstuteWheel advisers can demonstrate greater value and make clients more willing to sign up to long-term ongoing service agreements, ultimately making the FDS irrelevant. “It simply helps create stickier, happier, long-term clients and therefore more profitable, long-term businesses,” he says.

Since launch on 1 June 2012, more than 270 financial advisers across 90 financial advice practices representing over 30 different dealer groups have subscribed to the AstuteWheel.

AstuteWheel Client Engagement Platform <i class="fas fa-phone mid-blue"></i> 02 94 533 588
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