Despite the lockdown, chances are you've never had more contact with your clients than over recent weeks.
During times of extreme volatility, advisers play an essential role in reassuring clients and helping them avoid potentially disastrous knee-jerk decisions.
Reacting to news flow or market moves is rarely, if ever, a good strategy, but some clients need more coaching than others to hold their nerve.
The ‘steady as she goes’ message may not be enough for clients who understandably worry when they see the wealth they've carefully accumulated over the years suddenly come under pressure.
A paper by Capgemini on the top trends in wealth management for 2020 suggests there's something many advisers could benefit from adopting – providing personalised investment services.
According to the report, while clients value a personalised wealth management service, many don’t feel like they're getting one.
It found that just two in five of high-net-worth clients surveyed said they were satisfied with the level of personalisation they received.
From conversations with advisers, some see fund selection as a core part of their offering and spend a lot of time researching and selecting portfolios to match clients’ needs.
Yet research suggests this can be an inefficient use of time, as it restricts the number of clients it’s possible to service. It also carries a high level of regulatory risk.
Traditionally, the alternative was to introduce clients to a third-party discretionary fund manager (DFM).
However, advisers have been put off by the prospect of clients going direct to the DFM, as well as by high minimum investment levels.
The use of technology has created an alternative which keeps the adviser central to decision making, doesn’t require discretionary permissions, yet opens the door to the fully personalised service that clients value.
It's what I call 'mass customisation', which allows advisers to customise model portfolios to match clients’ needs in a scalable way across multiple clients.
It’s a proposition we’ve been championing for the past 10 years but which is now gaining traction as others launch their own versions.
Mass customisation offers:
- Personalised service through the adviser – clients are not introduced to a third-party
- Customised portfolios with no minimum investments and consistent approaches to risk
The impact of PROD
As you'll be aware, the Product Intervention and Product Governance Sourcebook (PROD) rules have been in force for over two years as part of Mifid II.
Research we carried out with advisers and experts last year found that many advisers still find the PROD compliance process to be daunting.
The regulation requires advisers to segment clients to clearly demonstrate that the investment service they are offered fits their specific needs.
For advisers who are relying on standard third-party model portfolios, their one-size-fits-all nature arguable makes meeting PROD requirements difficult. Switching to a mass customisation model could remove this issue.
Meanwhile, advisers managing their own portfolios might be meeting the PROD rules, but at what cost?
A mass customisation model may free up time that can be used on other aspects of the business.
If you're using this time to review your approach to investment services, it's worth considering whether a different way of doing things could benefit clients and your business overall.