[The Wrap] Building a bigger moat around advice businesses

To what extent does this apply to just mortgage brokers? And in that context what constitutes a client in the ongoing sense? I would be interested in comments of those who are better thought-through with it than myself. Thank you in advance!

I'm not convinced that the Regulator distinguishes between what level of relationship an adviser has with a client - irrespective of whether this is transitionary or fiduciary in nature. This will no doubt be 'tested' when a consumer feels that their original expectations have not been met (usually occurring after something goes wrong), forcing the adviser to figure out how they're going to defend themselves. Without wanting to sound patronizing, good notes and some form of documented ongoing contact should help with any defence.

Ooops Freudian slip: Transactionary not Transitionary (although oddly both work)

If meeting 80% of our clients annually isn't enough then we're all stuffed. Either that, or that assumption above is wrong. The only Advisers who meet even that many that often, will be CFPs with fewer than 200 clients, all of which will be hand picked HNW families. The rest of us can write, email and call them all day long asking nicely if they want to catch up. Most will still say no (for the next 2 or 3 years after the last interaction), especially if they got good and compliant and suitable advice, that they understood, the last time we met.

I would challenge the concept that a single adviser can not service a large book of business. In fact to me it is slightly concerning that the argument is even being mooted that an adviser can not service a large book of business. The key word here is "service". Service is not the same as "provide financial advice", but the inherent assumption made in the arguments relating to book size/adviser is that every client even wants personalised financial advice every year. The size of a book which can be managed by any firm depends entirely upon the service proposition offered to clients and agreed to by them - not what some outside party believes what the service level should consist of. What the client wants, and whether the adviser delivers to their expectations is what matters here. If an adviser is providing ongoing information and education in the form of financial literacy to their clients, together with a claims service or rate re-fix service as required by any client, together with an OFFER of a review (which will often be declined by close to 2/3 of any given client base in any given year), together with ongoing preferential access to advice then how can it be considered that the adviser is not "servicing the clients"? All of these functions in the example above require time, money and effort on the part of the adviser, yet on a book of 700 clients for instance it may only result in 240 or so clients engaging in accessing that personalised advice in any given year. The balance are content with the service they are receiving and do not wish to engage in further advice during that year - as is their right. Of those 240 who did require advice in the calendar year in this example, perhaps 50% of them would require what we might call comprehensive advice, with the other half requiring relatively simple or transactional advice relating to a single issue (e.g. what re-fix rate/term for a mortgage; adding a family member to a medical policy; topping up a Kiwisaver to get max tax credits). I'd suggest that a single adviser working a book of clients like this - which is fairly typical in my experience - can easily and professionally SERVICE 700-900 clients per annum if they are running an efficient practice with good systems and support. And it should be remembered that providing all of that service comes at a fairly significant financial cost to the adviser. The argument which suggests that all advisers should be physically meeting with all cleints every single year ignores entirely the wishes and expectations of the consumer here, and is therefore a nonsense. It is an academic utopian view which ignores the wishes of the consumer who lives in the real world.

Well said Tony

tony, you see, that's the trouble. we have people who have academic qualifications but zilch field experience telling us how to do our job. to put it bluntly, pretty much like a farrier (thanks murray) telling a car mechanic how a car should be overhaul. the authority seems to have trouble differentiating between giving an advice and after sales service. they forgot our clients are human beings, they all behave differently, different expectations, and different level of knowledge. hence, a size fits all rule won't work in practice.