Simon Brennan, Director at Tilney Smith & Williamson
The last 20 years have seen a deluge on a number of fronts: new regulatory frameworks, a significant change in the tax system and an explosion in data coming from all angles and media platforms. Add to that new product development, new regimes in every aspect of financial advice and not forgetting evolving of capital markets and the nuances of how they behave.
Now take the demands of clients and the requirements to ensure apple pie order of administration and paperwork, the ongoing advice, the review and a host of other matters to keep an adviser exercised and you will get a sense when advisers say they have no time to think!
Being a financial adviser in the 21st century requires the ability to juggle many demands of their time, the preparation of client fact finds and updating these is time consuming. Obtaining information around policies and financial service products can be long winded and require many attempts to unlock information. Most advisers are running businesses where they will be responsible not only for client management, but they will be involved in staff recruitment and management, they will need to be strategic in their business planning and quite often will be switching the lights off at the end of a day. Oh, and not forgetting complying with the financial service regulation, undertaking CPD, keeping abreast of product and tax changes and finally managing the business from a financial and reporting standpoint.
Overlaying the management of clients and staff there often will be management of client assets, this may entail using ready-made solutions, managing the client investments on an advisory basis or delegating to a platform solution. This exercise can be extremely demanding as it adds more into the day, as quite often stock markets may be irrational and lead to heightened concerns and discussions with investors. The last 18 months have brought sharp focus to this activity and the juggling of client demands and looking after a business in the pandemic may have allowed advisers to look at their business models and operating processes.
One area that remains a safe pair of hands in this consideration is delegation to a Discretionary Fund Manager (DFM) of portfolios; the complementing of the adviser services with those of a dedicated DFM may bring a host of benefits to all parties in the relationship. Often financial advisers are described as the trusted adviser, who will often be seen by clients as “sorting their financial affairs”, putting a plan in place, regularly reviewing and altering to ensure the objectives are met. In this set up comfort can be had by delegating the day-to-day management of funds to a dedicated professional manager. In doing this the adviser has not relinquished their client, they have oversight and control with their underlying client and can liaise with the DFM to ensure outcomes are being achieved. This arrangement ensures that correct risk and investment objectives are decided by the client and adviser, the delegation of investment management is clear on what is being asked and the review and update can be produced by the DFM to knit in with the financial adviser’s delivery of regular reviews.
Many hands make light work and the DFM will certainly bring this to the relationship. Many DFM businesses have significant market and economic research, asset allocation strategies, risk management, and focussed and regularly reviewed funds and market instruments which will populate client portfolios. This focus, along with integrated reporting to the adviser and client, ensures the service remains seamless and joined up with accountability on the day-to-day management of portfolios.
One area that has evolved in the last 15 years is around managing the pension funds for private clients. The flexibility and different arrangements for taking benefits can lead to a disciplined and regular review with the adviser, who will be conducting what needs to be obtained, how it is paid and running cashflow analysis on the likelihood of the pension outlasting the recipient. By having a joined up approach, the DFM can concentrate on the day-to-day investment management whilst the adviser can focus on other more productive areas of their business.
In concluding there is a lot to juggle in life, with family and the world we live in. However, for a financial adviser, having more hands and eyes on investment management may allow them more time to focus on client development and management without compromising their trusted status in the eyes of the client.
Simon Brennan, Director at Tilney Smith & Williamson has been helping financial advisers for over 20 years juggle! To find out more, please contact Simon on: 0141 212 9314 or visit Tilney for Professionals
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.
Issued by the Tilney Smith & Williamson group of companies (the “Group”) which comprises Tilney Smith & Williamson Limited and any subsidiary of Tilney Smith & Williamson Limited from time to time. © Tilney Smith & Williamson Limited 2021