Client servicing is a big issue under the new rules
Jon-Paul Hale reckons the way advisers "service" clients under the obligations of the new financial advice regime is going to be challenging.
Monday, March 22nd 2021, 7:04PM
by Jon-Paul Hale
Jon-Paul Hale
Following on from my last epistle with cover security, certainty, and guaranteed wordings, this one is more of a hairy one for advisers still wrapping their heads around March 15.
So what does this have to do with adviser servicing?
Quite a lot, because as we move onto the new playing field, we will be presented with new challenges.
One will be having to disturb that client you haven't talked to for a decade. And that will likely need someone at a provider help out with their policy.
Gone are the days of flick a letter after the insurer renewal letter and job done – if that happens at all, based in the past on the insurer's renewal letter being enough. There is a requirement that ongoing servicing for your client is going to need to be done.
Now the question here is what does that look like?
For one, it is taking reasonable steps to actually talk to the client. And that can be hard when they move and don't provide you updated contact details. And we all have some of those.
I have one client where the best place to catch them is Snapchat. The problem is that platform is designed to delete all trace of the conversation as you go. So has some serious professional issues.
Another I located the client via a chance meeting in a Facebook group under their married name, an "umm … I think I know you" type of chat. Yes, they had moved, and all contact details had changed.
Educating clients
We are going to have to do two things when we meet with clients.
- Explain what servicing is and what the industry/regulator expectation is.
- Gain a client's commitment to what that servicing looks like for them and what their obligations are to you.
It should be easy as part of your scope of service; the bit about them keeping you up to date on contact details won't change, and that's an issue.
From my time as a business development manager, there are plenty of advisers out there that doing this will be a near full-time job. They have client bases in the thousands and have worked on a catch and release basis. So they have a massive challenge.
And that is just for the clients that have had advisers. Something like 40% of the population doesn't have life insurance.
The other challenge is the 10,000 advisers needed to service client bases of around 500 people to cover the population – the technical limit the majority of advisers can service and work with to achieve the requirements.
The reality is that even when you have an active programme for reviewing clients, only a quarter to a third typically respond to reviewing things in any particular year.
This last year has been different with Covid-19, but that will settle back to where it was in time.
So what's the answer?
Technology, we're going to have to be smarter on client contact and collection of data.
Things like:
- Apps that hold client info so the client can update changes, SX and nib already do this to an extent.
- Tools and apps that trigger alerts and replies to the adviser business – privacy issues in this too.
- And automatic data collection and collation on contact with the client. I see advisers sending out pre-meeting forms requesting information. My personal experience with this has mixed results.
The key thing is when the compliance manager or regulator comes knocking on the door; you need to have a plan on how you are servicing your clients.
So add this to the to-do list too, with the rest of the things you have to get done ;)
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