Business

Welcome to this week’s newsletter! At We Complement, we’re dedicated to offering comprehensive support to financial advisory firms like yours. Our approach transcends mere reporting; we strive to seamlessly integrate into your operations, ensuring perfect alignment with your goals and values. This week, we’re excited to share insights on 5 things we need to know when you begin a partnership with We Complement.

1. We need to know your Centralised Investment Proposition and Centralised Advice Framework

As part of our thorough onboarding process, we prioritise understanding your business holistically. By delving into your central processes, such as the Centralised Investment Proposition (CIP) and Centralised Advice Framework (CAF), we seek to enhance efficiency and consistency in your service delivery. These frameworks not only satisfy regulatory requirements but also instill confidence in your clients, fostering long-term trust and loyalty.

2. Risk profiling tools

Moreover, our expertise extends to risk profiling procedures, where we guide you in selecting the most suitable tools and documenting crucial client discussions. This meticulous approach ensures that your advisory decisions are well-informed and compliant with industry standards.

3. Annual Review process & Templates

In our recent poll conducted this week, we discovered that a significant 60% of advisers believe their Annual Review process could benefit from enhancements. As part of our onboarding procedure, we’ll request to review your templates to better understand your current approach. At We Complement, we understand the pivotal role of customisation in the annual review process. That’s why our in-house templates are designed to go beyond the ordinary, providing comprehensive explanations that not only resonate with clients but also fulfill stringent compliance requirements.

4. Are your client files in a good place?

Additionally, our collaboration extends to your internal compliance and file-checking procedures. By aligning with your established protocols, we guarantee that our work meets your compliance expectations, minimising risks and enhancing operational efficiency.

5. Where do we fit in amongst your in-house team?

Integrating closely with your administrative team streamlines processes, allowing you to focus on delivering exceptional financial planning services. This collaborative approach improves client satisfaction and cultivates a culture of excellence within your firm.

At We Complement, our commitment to your success extends beyond the initial onboarding process. We view our partnership as a continuous journey, where we remain dedicated to supporting your firm at every stage of growth and evolution. Whether you’re navigating regulatory changes, expanding your client base, or exploring new avenues for innovation, we’re here to provide strategic guidance and practical solutions. Our team of experienced professionals stays abreast of industry trends and best practices, ensuring that our support remains relevant and valuable in an ever-changing landscape. By choosing to collaborate with We Complement you gain a trusted ally who is invested in your long-term success.

If you would like to discuss this and other ways your business could benefit from working with us, please contact us online or call 01472 728 030.

I have always believed a firm should have its own bespoke CRP. I also believe that, if anyone is ever going to have a financial planner engaged, it should be in retirement. However, there are several elements’ adviser’s must know when commissioning or preparing such propositions.

Ongoing suitability

Firstly, ongoing suitability; it is important here for advisers to remember that pension drawdown is not a product, it is a pathway. It may be something to consider once a client is in retirement and looking at possible decumulation, but the bigger picture needs to be considered.

As we all live longer, retirement comprises several stages, from the first flush of activity filled with holidays and grandchildren to the latter years, which may feature ill health and the need for fully supported accommodation.

All clients are unique but do share common fears, concerns, and desires for superior quality of life at all ages but especially in retirement. People have diverse ways of achieving those desires, so, rather than shoehorning every client into flexible drawdown solutions, advisers must always focus on what is right for the client.

Therefore, regular reviews are vital because, whilst it is important to have a plan, a cash flow forecast or similar, at the start, once that plan has been drafted, its value and accuracy will erode. Therefore, an adviser’s role and advice becomes critical. Ensuring that any plan remains suitable during the clients’ differing retirement stages, rather than concentrating on individual products.

An effective CRP is not about how money is invested; it must consider each client’s behavioural biases, health issues, and legacy plans. It involves difficult discussions, handled sensitively – after all, none of us want to leave this mortal coil but we are all going to, and an adviser must be that critical friend making sure the pathway is suitable.

Because assessing a client’s attitude to risk and capacity for loss is not just terminology to tick off; it should be part of an overall ongoing discussion document that paints a unique picture of each individual’s life.

Sustainable withdrawal rates

As highlighted in the excellent book ‘Beyond The 4 per cent Rule: The science of retirement portfolios that last a lifetime’ by Abraham Okusanya, we need to think differently about income drawdown sustainability and consider different income solutions for different client’s income needs. This change in mindset will not be easy and the requirement for a new solution to a new problem has not been universally embraced by the advisory community.

In my 30+ years in the financial planning profession, we have seen the many recessions and financial crises, such as the tech meltdown of 2000 to 2003, the great recession of 2008, and a pandemic. No one saw any of these coming, which highlights the importance of having investment portfolios built in such a way that clients have a plan to get through 40 years of retirement.

Any adviser who writes up a plan and sends retirement clients on their way is not doing the job properly, in my view. They need to be tapping the tiller at least every six months to make sure that the clients’ withdrawals are still suitable for their retirement stage and continue to be sustainable.

Everything should start with the individual client and, as much as possible, their personal health and longevity position, not the mass market and lazy use of ONS averages. Every client will have their own requirement for income, their views on what core (essential) income is, their own mix of pension savings, debts, and liabilities, their own needs, and circumstances, and their own views on what investment risks are acceptable. It will be different for everyone and so everyone will have their own view of Safe Withdrawal Rates (SWR).

One way to define and evidence the SWR applicable to each individual is to approach it from two perspectives.

One. Ask the client to define their income needs, and split between essential expenditure and discretionary spending.

Two. Understand and establish the ‘controls’ for each income stream. The moving parts can explicitly define how the SWR is achieved.

Drawing up a CRP

An effective CRP is a starting point as a template for each client and ensures, while they may all end up in a different place, they have all been through the same process. It should be a document that can apply to a retired doctor, or a retired dustman; both will go through the same discussions and end up will be in the right place for them.

Below is a checklist of the areas to consider when developing a CRP or retirement planning process:

• PROD: Is it documented. Is it embedded in your DDQ?
• Evidencing value for money – FCA consultation paper CP20/9
• Cashflow Tool: Do you use one? What are the assumptions within it?
• Retirement Fact Find: Updated date. Does it include soft facts?
• Annuity Rates: Checked rates. Update frequency?
• Safe Withdrawal Rate: Rate used. Consistency. Evidence?
• Cash Buffer: Yes or No? How held (on/off platform). How much?
• Risk Profiling: ATR. C4L. Need for Return. Risk tool Due Diligence?
• Inflation Assumptions: Rate used. Evidence?
• Taxation and allowances considerations: Income Tax and Lifetime Allowance, etc
• Sequence Risk: Understanding and explaining it. Mitigation Strategy?
• Investment Philosophy: Is it documented. Evidence?
• Investment Service: Pots or Single? Small Pots. Evidence/DDQ?
• Adviser Service Offer: PROD segments. Drawdown service?
• Adviser Fees: £s or %. Small pots. Long Term. Documentation?
• Platform for Drawdown: Checklist (PROD and Service). DDQ?
• Client Understanding: Process. Simplicity. Documentation?
• Vulnerable Clients: Statement. Process. Documentation?
• Conflicts: Issues. Management strategy?
• Showing Your Value: Examples. Communication?
• And last, but not least, is it aligned with your consumer duty requirements?

We Complement works with firms to build the CRPs, which should reflect a firm’s ethos, their desire to help, what is right for their clients and their investment beliefs, creating a document they can use as a guide each time.

A successful CRP is a living document, constantly updated to reflect a client’s changing desires and circumstances. Our aim is to support advisers in creating such documents while maintaining that regulatory consistency to keep everything in check and make sure the client is happy – which should be everyone’s goal.

If you would like to learn more about CRP, read the book that our founder Tony has written, which is full of useful information and insights.

We would love to help you to either revisit or implement your CRPs, contact us online or by calling 01472 728 030

Running a financial practice is a rewarding journey filled with excitement and challenges. However, amidst the exhilaration, it’s not uncommon to feel overwhelmed, stressed, and stuck at times. The endless to-do lists, tight deadlines, and constant changes in the industry can take a toll on your well-being and your business’s success.

If you find yourself in this situation, know that you’re not alone. Many financial practitioners face similar struggles, but there are proactive steps you can take to navigate through these challenges effectively.

1. Write It Down: Feeling overwhelmed often stems from mental clutter. Take a moment to declutter your mind by jotting down all your tasks and responsibilities on paper. This simple act can help alleviate the burden on your brain and provide clarity on what needs to be done. Don’t worry about organising or evaluating tasks at this stage; just get them out of your head and onto the page.
2. Focus on the Process: While it’s essential to have clear goals for your practice, it’s equally important to focus on the process of achieving them. Instead of fixating solely on the end result, break down your objectives into smaller, manageable tasks. By focusing on each step of the journey, you can avoid feeling overwhelmed by the magnitude of your goals and make steady progress towards achieving them.
3. Schedule and Prioritise: Break down large projects into smaller milestones and schedule specific times to work on each task. Just as you prioritise meetings with clients, allocate dedicated time slots for completing essential projects. This approach not only ensures that you stay on track but also prevents last-minute stress and overwhelm.
4. Seek Strategic Support: Recognise when you need additional support in navigating the complexities of running a financial planning firm. Whether you’re struggling with acquiring clients, managing finances, or implementing regulatory requirements, seeking strategic coaching and guidance can provide valuable insights and assistance. Sometimes, an objective outsider can offer a fresh perspective and help you address challenges more effectively.
5. Address the Root Cause: While short-term solutions can alleviate immediate stress, it’s crucial to identify and address the root cause of your overwhelm. If you’re feeling consumed by stress and uncertainty, consider whether there are underlying issues contributing to these feelings. Whether it’s a lack of business management experience or uncertainty about your practice’s direction, acknowledging the problem is the first step towards finding a sustainable solution.

Remember, it’s okay to ask for help when you need it. If you’re interested in exploring how strategic support can benefit your practice, don’t hesitate to reach out to us. We’re here to provide guidance, reassurance, and practical solutions to help you rediscover your passion for your work and achieve greater success in your financial practice.

For a confidential consultation, please visit our website or call us on 01472 728 030. Let’s work together to overcome challenges, optimise your practice, and ensure you get the restful night sleep you deserve. Your well-being and the success of your business are our top priorities.