Why it’s so important to prove service delivery and justify your charges

How do you justify the ongoing fees you charge to clients?

New comments from the Personal Finance Society chief executive have thrown a light on how financial advisers illustrate the value their services offer in the face of increased regulatory scrutiny.

Keith Richards says that it’s vital that clients understand what level of service they can expect on an ongoing basis for the fees that advisers charge.

Keep reading to find out more about why it’s so important to justify and evidence the service you provide to clients – particularly if your fees are rising.

Advisers should be prepared for ongoing fees coming under scrutiny

In 2018, Money Marketing reported an FCA review which found that many advice firms had upped their ongoing charges without necessarily adding to their services since the RDR.

Just this month, Schroders’ latest adviser survey also showed that fees have slowly increased from 0.5% to something approaching 1%.

Speaking to Money Marketing at the PFS’ annual conference, Richards said that while the professionalisation of planning had moved charging models to focus on services rather than commissions, it was important that clients fully understood what was being offered on an annual basis.

“Every adviser firm should be already prepared for ongoing fees coming under scrutiny,” Richards says. “We have seen some campaigns in the consumer press highlighting how much is being taken out of funds over a ten-year period. To most clients, that will look offensive unless they understand the value they can get.”

The PFS chief executive says there is a chance the regulator will move attention more into ongoing fees after looking at other elements of charging models like contingent fees.

“Some advisers may well struggle to articulate value. The message the regulator constantly gives is it’s not what you do, it’s the client understands and values it.

“Sending a newsletter might be nice but it makes no difference to how much they understand.

“For a lot of clients, we can’t assume they understand. They might assume, but the problem exists down the road…because you can’t assume the client understands that, the value and part of the charge for ongoing services.”

How you prove service delivery to clients

If you want to be able to prove to both your clients and to the regulator that you are providing good value for the fees you charge, it’s important that you evidence this.

So, keeping good records is an excellent way of proving your service and justifying your fees.

It’s generally accepted that recording events, meetings and actions will lead to greater accuracy. We’ve all made a mental note to record something when we got back to the office, only for something else to happen and for it to slip our mind. Forgetting to add a note to a client file could be the difference between a complaint which is easily defendable and one that’s upheld.

The systems you use to record service delivery should, therefore, be accessible across different devices to ensure records are updated as soon as possible.

As well as reporting all the interactions you have with your clients, it’s also important to record the things that didn’t happen. Every adviser has clients who don’t respond to requests to arrange a review meeting and it could quite easily be these people who complain about a lack of service.

Ensure you record every interaction. Keep all the emails requesting a client meeting as well as notes if and when a client fails to respond.

It’s also important that everyone in your team, from the management to advisers, paraplanners to administrators, understand why it’s important to keep detailed records of client service. As the PFS chief executive says, if the regulator comes calling you may need to be able to justify your ongoing client fees.

It only takes one member of staff to keep poor records and you might be unable to defend a complaint.

Proving service delivery can also help your PI renewal

If you can prove that your advice is watertight and that your clients are receiving the service and reviews that have been promised, you may also find that it’s easier to secure good PI terms.

As we’ve seen, to prove that your ongoing service is excellent you need to evidence this. That’s where apps such as Trailblazer Tracking come in. You can record every interaction you have with your client, from emails to review meetings, and easily demonstrate that:

  • Regular reviews are being carried out
  • You’re providing the expected level of service
  • You can justify the fees you are charging.

Recording all interactions also means that, if you receive a complaint further down the line, you can demonstrate that you did what you said you would.

Make life easy by using the Trailblazer Tracking app

One of the big advantages of Trailblazer Tracking is that it allows you to record the service you’ve provided to clients in a timely and detailed way. Advisers can use the app via their phone or tablet, while administrators and paraplanners can use it on their desktop.

Additionally, managers and business owners can use the data to understand the progress each member of their team is making in delivering the agreed ongoing service. And, the whole system is secure and frequently backed up, ensuring your records are always there should you ever need them.

If you want to know more about the app, and how you and your team can use it to evidence your service delivery, please get in touch. Email enquiries@trailblazertracking.co.uk or complete our contact form.