I have been in financial services for over 30 years and ‘attitude to risk’ (ATR) assessments, of some sort or other, have always been a thing during that period. Admittedly 30 years ago it was a tick box and every one was usually ‘balanced’. That said, I do not think the ‘sophisticated’ questionnaires in use today are much better at ‘assessing’ people’s real ATR. In fact I am not sure every planner really stops and considers what ATR is!

In my view ATR assessments are still assessing the wrong thing. We should be getting under the bonnet and questioning and challenging a consumers ability to withstand volatility. Or, as Twin 1 puts it, ‘the degree of risk that an investor is willing to endure given the volatility in the value of an investment.’

Prospect Theory 2 (or loss aversion theory) claims that we hate loss twice as much as we love gains. I am not sure if it is always true for everyone but in my experience I never received panicked calls from clients when their portfolio went up more than they expected!

Financial planners correctly ensure that consumers understand that all risk investments should be considered as medium to long term commitments (five years plus). And, in the calm before the storm, the majority of consumers agree. The problem is though we don’t live in years, we live and experience our lives day by day. As such, once the investment storms are raging, as they often do, customers feel the pain and experience natural fears of bigger losses. Sadly, we are not always logical beings and our emotions can overwhelm the strongest of us.

When exploring tolerance to volatility I believe we should be exposing consumers to actual real data that shows the largest losses that a portfolio their ATR is deemed suitable for. Many will be surprised to see potential losses in the 30+% range are common place for most portfolios. Even ‘safe’ bond investments, such as UK long term Gilts, suffered losses in this range during 2022.

Planners should definitely be on the lookout for evidence of ‘risk propensity’. The tendency to choose higher risk options with a low chance of success. Risk perception, especially following sustained increases in investment markets, can also skew the results of a ATR assessment. Likewise periods of investment falls can increase consumer nervousness (putting an end to any idea that any of the ATR assessments are really reliable).

Risk capacity and risk knowledge are obviously vital components to consider, ability to take on risk and risk literacy. However, one of the biggest determinations of ability to cope with investment volatility is evidence of previously doing so.

One of my biggest suggestion, other than searching for previous evidence of holding during volatile periods, is to use actual monetary values when discussing potential losses as opposed to percentages. Confronting a client with a graphic showing the consumer that their £100,000 could be shown to be worth £70,000 or less at some point during the next 12 months due to volatility will focus their mind to that fact that investment losses are only real when they are crystallised.

In this week’s newsletter, we’ll discuss how to write consumer duty-focused suitability letters that simplify complex information and support positive outcomes for your customers. We’ll also provide helpful tips and best practices from the We  Complement team. Sharing the knowledge you need to create consumer duty focused suitability letters that make a difference.

What are consumer focused letters?

Consumer focused letters are suitability letters that prioritise the client’s understanding and outcome over compliance requirements. These letters are designed to communicate complex financial advice in a way that is clear and concise to the client. Consumer focused letters should include a summary of the advice provided, the client’s goals and objectives, the risks and benefits associated with the recommended investments, and the reasoning behind the recommendation. Additionally, these letters should address any concerns or questions that the client may have and provide guidance on how to proceed with the recommended investments. Overall, consumer focused letters should prioritise client education and support outcomes that are in line with the client’s financial goals and objectives.

What are the benefits of writing consumer focused letters?

There are several benefits, with the main one being increased customer understanding. By using clear and concise language and linking recommendations back to the client’s objectives, customers will be able to easily understand why the recommended product or service is suitable for them. This will not only increase their confidence in your advice but also lead to better outcomes for the customer.

Another benefit is the reassurance that they will meet regulatory requirements. The Financial Conduct Authority (FCA) place a strong emphasis on ensuring that customers are treated fairly and receive advice that is suitable for their needs. By writing letters that are customer-focused and demonstrate a thorough understanding of the customer’s needs, firms can reduce the risk of regulatory action being taken against them.

Finally, by simplifying suitability letters and making them more engaging, firms can enhance their reputation and build trust with customers. A well-written letter that demonstrates a deep understanding of the customer’s needs and objectives can help to differentiate a firm from its competitors and foster long-term relationships with customers.

When crafting a suitability letter with a consumer duty focus, it’s important to ensure that it contains all the necessary elements to provide a clear and thorough understanding of the recommendation being made. Here’s what should be included:

1. A clear statement of the client’s goals and priorities.
2. A summary of their current situation, including existing investments.
3. Explanation of the reasoning behind the recommendation and how it addresses the client’s needs and objectives, including associated risks.
4. Advantages and disadvantages of the recommended product, to provide a balanced view.
5. Explanation of the implications of any focused advice.
6. If an existing plan is being replaced, a clear comparison of the new plan versus the old plan.
7. A clear explanation of costs, charges, and potential penalties.
8. Explanation of the tax implications for the client.
9. A ‘further details’ section to include specific client information.

At We Complement we incorporate all the above into the templates we use day in day out, and the templates we create for our partner firms to use internally. If you would like us to design a suitability report template that can represent you and your firm and be engaging for your clients or update your existing templates to ensure they’re compliant, contact us online or by calling 01472 728 030.

You may have already read our previous blog explaining why it’s so important for advisers and planners to complete fact-finds in full and have an effective CIP.  As well as protecting your business from successful complaints and a loss of reputation, it could help your business grow by identifying opportunities you would have otherwise missed. You, should, however, adopt a Central Advice Framework. As a fully completed fact-find isn’t the only way to generate referrals and make your business more robust against complaints.

A Central Advice Framework works like a checklist to ensure you collect all the relevant hard and soft facts from the client and consider every option when making a recommendation. Read on to learn five powerful ways this could help enhance your business’s reputation if you’re a multi-adviser practice, and even make it prosper.

1. Reduces business risk

A Central Advice Framework puts systems in place that verify that you have taken a holistic view of your client’s situation. It ensures you have considered every aspect of their circumstances in the rationale behind your recommendation.

It verifies that you’ve engaged in joined-up thinking and have considered all the options for your client. While this makes any solution you provide safer and less likely to be challenged, it also means your recommendation is more likely to be the right one.

This will mean happier clients, which in turn could mean referrals and new future business.

2. Ensures you miss nothing

Because the Central Advice Framework is a checklist, you’ll have peace of mind that you have gathered and recorded every relevant hard and soft fact. For example, this might be the client’s capital needs as well as their income needs, or past investment experience and how this has shaped their views on risk.

This information is crucial when it’s passed on to a paraplanner, as they can use it to create a clear and accurate suitability letter that will stand up to inspection.

3. Ensures you ask the right questions.

This dovetails into the previous point, as the Central Advice Framework checklist makes sure you do not miss important soft facts that would otherwise result in you making the wrong recommendation. This provides you with peace of mind that your recommendation is less likely to be challenged later on. Making it more likely to be approved by your compliance unit.

4. Improves business efficiency

As the Central Advice Framework requires you to gather all the information needed by your paraplanners, they can produce a clear and compliant suitability letter more quickly. This is because the paraplanners will not need to chase you for missing information or clarification on certain points.

As a result, your compliance team are likely to approve your recommendation more quickly. Your client receives a more efficient service, and you could also have your presentation meeting and write the business sooner.

5. Assists with compliance

A Central Advice Framework ensures your business meets the 11 FCA core business principles. In particular, makes sure that “customers’ interests” are put first. In addition, it also helps you meet the PROD guidelines, which require you demonstrate that your business has a robust, reliable, and repeatable processes.

Get in touch

In reality, there are 110 things you need to remember to ensure that every client outcome is compliant. By developing a simple checklist to guide you through your client outcome, you can ensure that nothing slips through the net, and it could also improve efficiency.

We believe a financial advice business should have its own bespoke process for the reasons outlined above. That’s why we have prepared many for clients over the years and have extensive experience that puts us ahead of the crowd.

If you would like to learn more about Central Advice Framework, read “A framework for delivering robust, repeatable and reliable financial planning”. A very informative white paper written by our Managing Director Tony Slimmings.

If you would like to discuss how we could use our expertise to help you create a Central Advice Frameworkand relevant documents, please contact us online or by calling 01472 728 030.

Running a financial planning practice can be a lot of fun. But it can also be a lot of late nights, hard work and stress. So, no matter how confident you are in running your business, at some point you will feel stuck, like some pieces of the puzzle just aren’t fitting right, you don’t know which piece is causing the issue, and you don’t have the time or the ability to take a step back and address the issues objectively.

Most people will hang in there and just accept that it’s all part of the job – especially now in a time with constant change and challenges. But, these feelings of being stuck can leave you feeling worried, anxious and irritable. In general, causing your stress levels to hit the roof.

If you’re running a financial planning practice, you probably know this feeling well. You’re running on all cylinders trying to build your business. You have a never ending mental to-do list that grows longer every day. 24 hours is not enough, sleep is for wimps right?

Sound familiar? Is your brain a mush with too many ideas, too many deadlines, and not enough time to fit it all in? You’re certainly not alone. Fortunately, there are steps you can take to ensure you’re caring for yourself and your business at the same time.

Write It Down

One reason you might be overwhelmed is that your brain feels overloaded with information. You might be mentally juggling a long list of tasks that breed to those negative thoughts I mentioned earlier.

Get a piece of paper and make a list of everything that you need to get done. Don’t try to evaluate or organize every task, you can do that later. For now, just get those tasks out of your head and onto paper.

This technique can help to reduce the feeling of overwhelm. Your brain doesn’t have to deal with all the competing tasks and deadlines. You’ve cleared your mental block and have a tangible representation of what’s required.

It’s about the journey not the destination

It’s great to the end goal in sight, maybe that’s increasing revenue, increasing your client base or simply writing more business. But problems arise when you let the goals get in the way. When it comes to sitting down and actually completing tasks, all the roadblocks that could hinder your progress raise their ugly heads and mark their territory. What should have been a simple task, is now weighing you down.

Instead, stop thinking about how your simple task is going to help you write thousands of pounds worth of business, you should focus on the process of the task itself.

Break down the projects and then schedule the time in

Breaking down massive projects is a great way to reduce the overwhelm that builds from massive projects and tight deadlines.

Let’s use your Consumer duty implementation plan and CIP document as examples. The FCA has said they do not view these plans as being set in stone, but rather expect firms to develop them between now and the implementation date.

First, identify milestones for the plan, this could be determining good outcomes, training and identifying relevant data and metrics. Then go one further and think about the steps involved in reaching these milestones. Then, just as you schedule meetings with clients, schedule specific times for these tasks. This will ensure you stay on track with completion and are not overwhelmed at the last minute.

Finally, let’s get real.

The solutions above are all short term fixes that aren’t going to the root of the problem. If you’re feeling consumed by the overwhelm lets identify the issue at the source. It’s about working smarter not harder.

You’re an experienced adviser, but maybe you’ve never ran a financial planning practice. Or you’re running a business but it’s not going right, you’re not getting the clients you expected, your worried about finances, using the right suitability templates, or getting the propositions in place. It’s a struggle navigating the ever increasing complexities of running a financial planning firm, and maybe you need a little extra help, someone to offer paraplanning and coaching support, as well as reassurance and guidance. Maybe you need an outsider to take an objective view of the situation?

If this all sounds very interesting, email or call us on 01472 728 030. Let’s have a chat to see how we can get you back to loving what you do, and get a good night’s sleep to boot.

To many people, Six Sigma is ‘something done in manufacturing’. To me having spent six months obtaining my Black Belt and reviewing the processes within my own business, At We Complement we totally disagree.

Although Six Sigma has its roots in the 1980’s it has been applied successfully within the services sector for decades. Banks, Universities, Hospitals, and local governments are some of the diverse places that have benefitted from Six Sigma. There is even a book written in 2003 by Michael L George dedicated to the topic.

It is not only large companies, Six Sigma can be introduced into small businesses to improve processes. Including growing financial planning practices.

Six Sigma ranks among the foremost methodologies for making business processes more effective and efficient. In addition to establishing a culture dedicated to continuous process improvement, Six Sigma offers tools and techniques that reduce variance, eliminate defects and help identify the root causes of errors, allowing organizations to create better products and services for consumers.

People develop expertise in Six Sigma by earning belts at each level of accomplishment. These include White Belts, Yellow Belts, Green Belts, Black Belts, and Master Black Belts.

Does it work? Motorola reported in 2006 that the company had saved $17 billion using Six Sigma.

Experts credit Shewhart with first developing the idea that any part of the process that deviates three sigma from the mean requires improvement. One sigma is one standard deviation.

The Six Sigma methodology calls for bringing operations to a “Six Sigma” level, which essentially means 3.4 defects for every one million opportunities. The goal is to use continuous process improvement and refine processes until they produce stable and predictable results.

Six Sigma is a data-driven methodology that provides tools and techniques to define and evaluate each step of a process. It provides methods to improve efficiencies in a business structure, improve the quality of the process and increase the bottom-line profit.

A key component of a successful Six Sigma implementation is buy-in and support from executives. The methodology does not work as well when the entire organization has not bought in.

Six Sigma uses a DMAIC methodology for improving existing business processes. The letters stand for:

• Define the problem and the project goals
• Measure in detail the various aspects of the current process
• Analyze data to, among other things, find the root defects in a process
• Improve the process
• Control how the process is done in the future

If you are creating new processes then the DMADV methodology is used:

• Define the project goals
• Measure critical components of the process and the product capabilities
• Analyze the data and develop various designs for the process, eventually picking the best one
• Design and test details of the process
• Verify the design by running simulations and a pilot program, and then handing over the process to the client

The other big methodology is the Five Whys. This is a method that uses questions (typically five) to get to the root cause of a problem. The method is simple: simply state the final problem (the car wouldn’t start, I was late to work again today) and then ask the question “why,” breaking down the issue to its root cause. In these two cases, it might be: because I didn’t maintain the car properly and because I need to leave my house earlier to get to work on time.

Six Sigma in Financial Planning?

All the Six Sigma tools and methodologies serve one purpose: to streamline business processes to produce the best products and services possible with the smallest number of defects. Its adoption by corporations around the globe is an indicator of its remarkable success in today’s business environment.

Whether you are looking to improve your complete advice processes, your annual review process, your CIP, CRP or any element of your business speak to us about how we could use Six Sigma to improve the effectiveness of your financial planning business.

I now know this methodology can be applied into financial planning practices too. Read a case study here.

Tony Slimmings – MD

When you consider your daily activities, each one is a sequence of steps that make up a process. This can be anything from getting up in the morning, making that very first morning coffee, driving to work, or searching for car insurance. Most things involve a process in some form. Process mapping is a technique that allows you to visually represent these processes, tasks, and workflows. While it might not be appealing to map out your personal routines, in a team or work environment, a process map can bring clarity to everyone involved and is likely to enhance the process itself.

By mapping out a process in detail, organisations can identify inefficiencies and bottlenecks that can then be addressed and improved using Six Sigma and other tools. It also shows that organisations can demonstrate robust internal procedures and processes and better define roles and responsibilities Additionally, process mapping can help reduce costs and improve the quality of a service or the advice provided by a firm.

The benefits are numerous. Firstly, process mapping can help organisations identify areas of waste or inefficiency. This can lead to the reallocation or redistribution of resources to areas of greater potential, thus saving time and perhaps reducing costs. Additionally, process mapping can help organisations identify areas of overlap and communication points between teams or departments and highlighting opportunities for improvement or development. By doing so, processes become more efficient and effective.

By mapping, firms can identify areas of greatest risk and then address them accordingly. This can help the reduce the risk of errors or costly mistakes of various kinds. Additionally, process mapping helps internal practices stay up-to-date with regulatory changes and industry trends. This can support maintaining a competitive advantage.

Finally, mapping can help organisations grow and increase customer satisfaction by ensuring that their processes are efficient and effective. By mapping out the process and testing it on staff that don’t work in that area, or with test clients, firms can identify areas of confusion or difficulty for customers and address them accordingly. This can help firms increase customer satisfaction and loyalty, as customers will be more likely to stay loyal to an organisation that is responsive and proactive about their needs. (I didn’t want to make this yet another consumer duty blog but it always creeps in somewhere!)

Making organisational processes more efficient and eliminating unnecessary steps is a no brainer. However, before taking any action, it’s essential to ensure that all team members are in agreement. Process maps are an excellent tool for depicting a process within a team and promoting collaboration and input from team members. By visually displaying all the steps and decision points involved in a process (including who executes them), completing a map provides a clear organisational snapshot. This snapshot can serve as a starting point for the way forward.

Our team is on hand ready to help map your way forward, giving We Complement a call is a great starting point.

Thanks to Consumer Duty, our need for efficient and streamlined operations has never been more critical. Financial advisers are constantly seeking tools that not only simplify their workflow but also enhance their overall productivity. One such tool that has gained significant traction in recent years is Intelliflo Office. A comprehensive practice management system designed to meet the unique needs of financial professionals. So it would seem that for many financial advisers, this is the preferred back office product. Perhaps this is no surprise as according to the market statement, Intellifo’s services are used by around 30% of the advi.ce profession.

We are not connected to Intelliflo office in any way and will always select a back office system that is the right one for our clients. We just understand that so many firms are not getting the best out of their Intelliflo office licences. The question that often arises is, “Are you truly leveraging your Intelliflo Office licence to its full potential?”

Yes keeping in touch with your clients on a regular basis is a great thing to do, however, as you will no doubt know, the Financial Conduct Authority (FCA) also requires advisers who supply investment advice to do annual planning reviews in a formal way. Specifically, you should “agree with a client whether a periodic assessment of suitability will be performed. If periodic assessment is to be performed it must be at least annually and the continued suitability confirmed in writing”.

These annual planning reviews (which we can help with, more of which anon), are a valuable opportunity to have a really in-depth check-in with your client – and the best ones focus on the person, as well as the products.

So, while it is possible to include everything on one page, at We Complement we believe APRs should become a document of your client’s annual financial planning journey – not just a snapshot.

For example, while obviously you need to include details of all current investments, their performance and any recommendations you would make, a good APR will also appraise your customer’s circumstances – what are they investing for, how they are planning on making it work and any worries they may have.

Clearly, this is considerably more time consuming for an IFA – which is where the We Complement team come in.

We will work with you to develop a document which is personal to each client, while also ensuring it truly represents your brand. We will undertake all necessary research to emphasise the value you have provided during the previous 12 months – and how you will continue to do so in the future.

We can also access all the necessary information on your system, such as products, planning and risk profile, and add these to the APR document, giving an overall review that provides a truly detailed view of your client’s financial year.

We Complement believes that your annual planning reviews are a great opportunity to engage fully with the financial planning needs of your clients. Sending a one page summary just seems to be such a wasted opportunity not to take the chance to engage positively with them.

Once we have all the details we need, we go ahead and prepare the review, and typically produce reports in five to seven working days.

For more information about our annual review offering and complementary offerings, and how they can benefit you and your clients, please get in touch.

Central Investment Proposition Guide

We support financial advisers with the design, development and ongoing review of Central Investment Propositions, often referred to as CIPs.

A Central Investment Proposition is a structured, evidence-based investment framework that helps advice firms deliver consistent recommendations across their client bank. When designed well, it can support better governance, clearer due diligence, stronger documentation and more consistent client outcomes.

For many firms, the challenge is not simply having a CIP in place.

It is making sure it is properly reviewed, clearly documented, aligned to the advice process and able to stand up to Consumer Duty expectations.

If you are reviewing your CIP, building one from scratch or looking to strengthen your investment proposition, our outsourced paraplanning services can support everything from research and due diligence through to documentation, governance and ongoing review.

What is a Central Investment Proposition?

A Central Investment Proposition is a standardised investment approach that allows financial advisers to offer a consistent and well-researched investment solution to clients.

Rather than starting every recommendation from scratch, advisers can work within a defined investment framework that has already been researched, reviewed and agreed by the firm.

A good CIP will usually set out:

• the investment solutions the firm uses
• the types of clients those solutions are suitable for
• the research and due diligence behind the selections
• the governance process for reviewing the proposition
• the circumstances where it may be appropriate to go outside the CIP
• how the firm evidences value, suitability and client outcomes

That does not mean every client receives the same recommendation.

It means there is a clear framework behind the advice, with enough flexibility to reflect the client’s objectives, attitude to risk, capacity for loss, tax position, time horizon and wider circumstances.

Why financial advisers are reviewing their CIP

Many financial advice firms already have a Central Investment Proposition of some kind.

However, Consumer Duty has made the quality of that proposition, and the evidence behind it, even more important.

Firms are reviewing their CIP for several reasons, including:

• increased regulatory scrutiny under Consumer Duty
• the need for stronger evidence and documentation
• the need to show how investment solutions support client outcomes
• improving consistency across advice recommendations
• reviewing value for money
• making sure the proposition still reflects the firm’s client segments
• checking that governance and review processes are properly recorded

For some firms, the CIP itself may still be suitable.

The bigger issue may be whether the rationale, governance and due diligence are clearly evidenced.

That distinction matters.

It is one thing to have an investment framework. It is another to show why it remains appropriate for the clients it is designed to support.

Who benefits from a Central Investment Proposition?

A good CIP should benefit both the advisory firm and its clients.

For firms, it can support consistency, efficiency and better governance.

For clients, it should help ensure investment recommendations are researched, reviewed and aligned with their needs.

The key point is that a CIP should not be built around business efficiency alone.

It should reflect the firm’s client bank.

That includes client segmentation, different attitudes to risk, different investment timeframes, different tax positions and different preferences, such as active, passive or ethical investment approaches.

Flexibility is also important.

Client circumstances change. A client may retire, inherit money, suffer a change in health, lose a spouse, sell a business or start drawing income from their portfolio.

A robust Central Investment Proposition should be structured enough to provide consistency, but flexible enough to adapt when a client’s needs change.

Any costs should also be clear, transparent and capable of being explained.

How does a CIP work for an advice firm?

Some firms manage their Central Investment Proposition through an investment committee.

That committee may be responsible for reviewing investment selections, monitoring performance, assessing value for money, challenging existing solutions and deciding when changes are needed.

The committee may also set the parameters for when advisers can go outside the CIP.

That point is important.

A Central Investment Proposition should not become a rigid process that overrides client circumstances. There should be a clear route for exceptions where the standard framework does not fit the client’s needs.

An experienced paraplanner, suitability specialist or outsourced paraplanning partner can add real value to this process, particularly where the firm needs support with research, due diligence, documentation and governance.

For smaller and medium-sized advice firms, establishing and running a CIP can be time-consuming.

In-house research takes time. Investment committee meetings need structure. Decisions need to be recorded. Due diligence needs to be kept up to date. Changes need to be explained clearly.

Consumer Duty has added another layer of accountability.

There should be no blurring of lines between what is efficient for the business and what is right for the client.

Using third-party investment solutions

Some advice firms choose to outsource investment selection to a third party.

This might include Managed Portfolio Service providers, Discretionary Fund Managers, platform-based model portfolios or other outsourced investment solutions.

This can work well, but advisers still need to understand their responsibilities to both the third-party provider and their own clients.

Outsourcing investment management does not remove the need for due diligence.

Firms still need to understand:

• why the provider has been selected
• which clients the solution is suitable for
• how the solution fits the firm’s advice process
• how performance, risk and value will be reviewed
• what governance is in place
• what happens if the provider changes approach
• how the client journey is affected
• how any migration from one solution to another will be handled

Moving from one third-party provider to another should also be treated carefully.

There is a real challenge for advisers in explaining why a firm is moving from one provider to another, particularly if the change happens within a short period of time.

The rationale needs to be clear.

The due diligence needs to be comprehensive.

And the client impact needs to be considered.

CIP governance and Consumer Duty

Governance is one of the most important parts of a Central Investment Proposition.

It is not enough to choose a range of providers or funds and leave the proposition untouched.

Firms should be able to show how the CIP is reviewed, how often it is reviewed, who is responsible for reviewing it and what evidence supports the decisions being made.

That includes looking at value for money, client outcomes, performance, risk, charges, suitability and whether the proposition still reflects the firm’s client segments.

Under Consumer Duty, firms need to be able to evidence how their products, services and processes support good outcomes for clients.

For a CIP, that means asking questions such as:

• Is this proposition still suitable for the clients it is designed for?
• Are the charges clear and justifiable?
• Are clients receiving fair value?
• Does the proposition still align with the firm’s target client segments?
• Are there clear rules for when advisers should go outside the CIP?
• Are reviews properly documented?
• Is the firm relying too heavily on a provider without enough challenge?
• Can advisers explain the rationale clearly in suitability reports?

The answers to those questions do not need to be complicated.

But they do need to be evidenced.

Back-office systems and risk profiling

Another important consideration is how the Central Investment Proposition works alongside the firm’s back-office systems, risk profiling tools and advice process.

The chosen risk profiling tool should work in conjunction with the CIP.

There should be a clear link between the client’s attitude to risk, capacity for loss, investment objectives and the recommended solution.

If the firm uses model portfolios, platforms or third-party providers, advisers and paraplanners need to understand how those options map across to the risk profiles being used.

This is where good process matters.

A CIP should make advice clearer, not harder to explain.

If the system, risk tool, investment proposition and suitability report wording do not line up, the advice file can become harder to evidence.

Avoiding complacency

One of the risks with any Central Investment Proposition is complacency.

Once a firm has a CIP in place, it can be tempting to assume the hard work has been done.

But a CIP should not be static.

Markets change. Provider propositions change. Costs change. Client needs change. Regulation changes. The firm’s advice process may also change over time.

That means the proposition should be reviewed regularly, with good record keeping around the discussions, decisions and rationale.

The question is not only:

“Do we have a CIP?”

It is also:

“Can we evidence why this CIP remains appropriate?”

That is the part many firms need to focus on.

What should a Central Investment Proposition include?

A well-documented Central Investment Proposition should usually include:

• a clear explanation of the investment approach
• client segmentation
• the recommended investment solutions
• research and due diligence
• risk mapping
• cost and value assessment
• governance and review process
• rules for exceptions
• provider due diligence
• documentation of investment committee decisions
• suitability report wording guidance
• review dates and responsibilities

The exact structure will vary from firm to firm.

But the aim should be the same: to create a clear, consistent and evidence-based framework that supports suitable recommendations and good client outcomes.

Need support with your Central Investment Proposition?

If you are reviewing or building your Central Investment Proposition and need structured, practical support, We Complement can help.

Our team supports financial advisers with research, due diligence, documentation and governance through our outsourced paraplanning services.

We can help you strengthen the evidence behind your CIP, review how it fits into your advice process and make sure the rationale behind recommendations is clear, consistent and properly documented.

For firms that want wider support, our suitability consulting and paraplanning services can also help connect the CIP with suitability reports, advice file quality and ongoing review processes.

This article outlines a case study for a financial planning firm that we worked with on a process improvement project and increased efficiency and productivity.

FYI, Adviser Wealth is an alias for a firm that would rather remain anonymous!

Adviser Wealth – Case Study

About Process Improvement

Adviser Wealth is a leading financial practice based in Hampshire. The Adviser Wealth team is made up of 3 advisers, 4 administrators/junior paraplanners, and 2 paraplanners.

Adviser Wealth puts its people at the centre of everything they do. The team’s excellent principles and values are why Adviser Wealth has successfully provided clients with excellent financial planning outcomes for over 35 years. In particular, providing bespoke solutions to help clients meet their objectives.

process Improvement Challenges

Adviser Wealth has successfully supported the development of two paraplanners into advisers. This has left a serious lack of experience within the paraplanning team and means that the firm is beginning to fall behind when it comes to preparing the 25 annual reviews required each month.

Adviser Wealth was quick to address the need for additional paraplanners to support their existing ones and decided to outsource some of the paraplanning, as this would offer a flexible solution to assist in-house paraplanners when periods are busy and be able to switch off in those months when things are quiet.

After reaching out to 3 different paraplanning firms and having chats with all it was decided that We Complement would make a great fit as their company values mirrored their own.

Process Improvement Solutions

After going through a smooth onboarding process with our process consulting team, we completed a process map. This helped us to identify the specific areas where Adviser Wealth needed support and helped us see where we fit in in terms of their bigger picture.

This process improvement project also helped We Complement to make strategic suggestions as to where small changes could be made to existing internal processes, which would then further improve efficiency and productivity.

We identified that the in-house paraplanners were unsure as to what needed to be included in a suitability letter and what information could be left on the client file. Meaning some of the existing Suitability report templates were over 30 pages long. Not only were they uninspiring to look at, but they were also written for compliance people and not the client!

We Complement senior analysts worked with the inhouse paraplanners to create a suite of slimmed-down templates, which were bespoke to Adviser Wealth and are consumer duty ready. These fully functional templates use a snippets system that really optimises efficiencies in producing the report, meaning an annual review that previously would take a paraplanner on average 5 hours to complete could be completed by a junior paraplanner in 3 hours. The inhouse paraplanners and junior paraplanners were all trained on best practice in using these templates, and We Complement provided weekly check-ins to ensure they continued to be used efficiently and could be called upon to provide overflow paraplanning support as required.

We Complement is now looking at the Adviser Wealth technology overall, to ensure all licenses are being used to their maximum capability, but more on that later!

Give us a call to discuss what you would like to get out of working with us on a process improvement journey with We Complement. Contact us online or call on 01472 728 030.