The fee you cannot evidence
A long-established firm may have clients paying for an annual review they have not had. This is a Consumer Duty issue first and a valuation issue second.
A long-established firm may have clients paying for an annual review they have not had. This is a Consumer Duty issue first and a valuation issue second.
Produce a list of your clients with the ongoing fee against each name and the date of the last documented review. Sort by that date. Count the clients whose last review was this year.
In a firm with twenty years of history, some of the dates will be several years old. Clients who ring you get seen. Clients who went quiet after their original adviser retired and passed them to you do not ring.
An ongoing fee is payment for a service. Under Consumer Duty a firm has to be able to demonstrate that the price is reasonable relative to the benefit the client receives. For a household with no documented review in four years, that is difficult to demonstrate.
The client may not have been harmed, and the portfolio may have done what it was meant to do. The problem is that nothing on the file shows anybody checked.
For each of these clients, re-engage them, change what they pay for, hand them to a firm whose model fits, or stop charging. Each of these four can be defended. Leaving the fee in place without a review cannot.
The effect on the sale price matters less than the Consumer Duty point. When a third of the clients have no recent review, a buyer cannot tell what a file review would find, and lowers the price to allow for it.
Do the work because the client is paying for a service. It will also raise what the firm is worth.
Making sure somebody else at the firm has met each client takes about two years and raises what the firm is worth.
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Read itSteven Bates, Director of Advisory at Equity & General, takes the first call with every adviser. Ring him on 020 8396 0486 or send a short note about your firm.