How to create a top-notch review process

By Sarah Kendell ·
May 20 2021

How to create a top-notch review process

As the annual opt-in deadline draws closer, many advisers are understandably nervous about justifying their fees to clients on an annual basis. One industry technology expert tells how practitioners can evolve their review process to demonstrate immediate value to clients.

In a recent episode of the ifa Show podcast, AstuteWheel managing director Hans Egger said there were two key challenges for planners as a result of the forthcoming regulatory changes, and the broader evolution of the adviser value proposition that was happening alongside it.

“The challenge for financial planners is to have a review process that is truly valuable to their clients and is not reliant on how well their investment portfolio is doing from year to year, and then to be able to price that in a way that they can actually make money,” Mr Egger said.

He added that it was key for advisers to focus their review process around the client’s goals and their progress towards achieving them.

“I think the best practices will have laid the groundwork for this by making the client goals the center of their advice right from the start. So the review will then be about tracking those goals and perhaps adjusting some goals and maybe adding some new goals,” Mr Egger said.

“Good practices will have done all that in the initial meetings or in the previous meetings, and then will just build on it.”

Further, Mr Egger said it was important that advisers and clients set achievable goals together from the start to ensure that the client’s progress towards them over a 12 month period was clear.

“Many advisers struggle with this and they often find themselves retro-fitting a goal to justify the advice that they're providing,” he said.

“To do it properly and efficiently involves a number of steps. Step one is ask the client to provide you with a list of their goals, and you'll have to provide a list of potential goals to help them in the process, because it's difficult for a client to do that. Step two is discuss the goals with the client and make them a SMART goal, so specific, measurable, achievable, realistic, and time-bound.

“Step three is agree to any new goals and identify if any goals are in conflict with each other - buying a new sports car is not going to be going to work well if also you're trying to pay off the credit card. Step four is linking each goal to a scope of advice segment - you can't just say, I'd like to provide you with retirement planning if you actually don't have any goals around that.

“Step five is the letter of engagement, which clearly links the goal to the scope of advice, and the strategies being considered and allows you to provide the price of that advice. So if you go through that process, you're capturing all the information, you're providing a process that the client understands, and you're also collecting all the compliance that's required.”

Mr Egger said another key part of top practices’ value propositions centred around helping the client to manage changes in their financial circumstances and steer them through volatility in investment markets.

“The review process is about understanding and interpreting change: change in the client's circumstances as they get older, as children grow up and leave home and as they approach retirement, but also change in market conditions,” he said.

“Interest rates are at an all time low at the moment, share markets and the Aussie dollar are constantly going up and down, and also changes in legislation. Financial planning is all about interpreting these constant changes to identify opportunities and also to identify and mitigate risk, to keep the client's financial plan on track.

“If the client understands that and the plan that delivers it, then the value is demonstrated and is ongoing.”

Hans Egger will present at the upcoming Adviser Innovation Summit 2021 - click here to secure your ticket.

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How to create a top-notch review process

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