Time to rise against the machines
Financial advisers and planners must find ways to innovate their service and enhance their value proposition if they are going to survive in the brave new world of digital advice.
In addition to the need to increase transparency and accessibility, one of the biggest threats to the traditional advisory business model, comes from new technology. The emergence of new industry participants offering digital financial advice services and robo-advice have already taken market share across both retail and private banking.
Worryingly, recent studies suggest that in the long-term, these services could not only supplement human financial advice, but replace it for all but high and super high net worth investors. In the absence of a financial adviser, taking financial risks can be a challenging task for many retail investors. However, these technologies claim to support financial decision-making through risk-measurements, portfolio selection and rebalancing.
The end result is those traditional wealth managers, financial advisers and planners who choose not to continue innovating or are unable to, risk losing clients who are seeking advice via cheaper, less personal, alternative methods.
The human touch
At IBOSS we firmly believe clients benefit from the human interaction at many times during the client-adviser relationship. Our experience tells us, it can often be in times of market stress or changes to personal circumstances when it becomes particularly important to have the ability to discuss issues of concern for the client. At times such as these, it really needs to be with someone they know and trust.
Ongoing communication between adviser and client is vital, especially when discussing and reviewing long-term investment decisions. To that end, all of our products and services are created exclusively to support and demonstrate the advantages of interpersonal financial advice.
Advisers are constantly under pressure to justify fees and demonstrate added value. Both factors are crucial if an adviser is looking to either attract new customers or just retain their existing ones.
The previously accepted levels of financial planning and investment management are no longer considered enough. Clients want an adviser who is obviously trustworthy, but they will also need to demonstrate their knowledge, and this extends further than just having the required qualifications.
An understanding of macroeconomics, social issues on topics such as long-term care providers and good old life experience can all add value, which is hard to quantify, but can be a real differentiator.
The MIT AgeLab recently conducted an analysis based on online reviews from Yelp and Angie’s List to identify the key characteristics client’s value in financial advisers.
Topping the list was personalisation. Clients want to work with financial advisers who understand their individual needs, goals and timescales, and take them into account when coming up with a financial plan.
Effectively managing clients’ investments can be a very challenging and time-consuming task, but delegating investment responsibilities to an outsourced firm, such as IBOSS, can increase the time an adviser has to dedicate to the preservation of client relationships and individual client requirements.
Second on the analysis results was expertise, primarily expertise of financial markets and investments, as well as an up-to-date knowledge of current economic conditions. To help satisfy clients’ expectations for this knowledge, we aid advisers by providing a portion of this expertise to clients through our white-labelled communications.
Each quarter clients invested within any of our investment solutions can receive a white-labelled report detailing the allocation changes/proposed changes to their portfolio/fund, along with an overview that explains why each decision has been made. These updates are free of charge (OEIC Fund Range/MPS) and are sent directly to the client on behalf of their adviser. These documents carry the branding of the advisory company and are addressed from the adviser themselves.
We also include a Market Summary; a document that informs the client of all the latest and relevant economic information, from stock market performance to political matters which may be affecting their valuations. We feel this part of our communication provides an invaluable insight into our Investment Team’s thought process, whilst satisfying clients with a level of expertise that they expect from their adviser.
Our client facing material is jargon-free, making it easy for clients to engage with and appreciate. These quarterly updates create a level of client involvement that makes them part of their investment journey. We believe this service demonstrates to clients that their adviser is going above and beyond, justifying fees and demonstrating value for money.
The IBOSS track record
We know that great communication alone can only satisfy clients to a certain extent. At the end of the day they put a lot of trust in their financial adviser to provide financial security for themselves and their families. So, the need for portfolio performance is equally as important as the regular communication they receive.
The chart below demonstrates the consistent performance of the Portfolio Management Service (PMS), with returns higher than the benchmark, with less than market risk (as measured by volatility) over a 10-year period. These models continue to offer excellent risk-conscious returns.
Our discretionary model portfolios of the Managed Portfolio Service, mirror the IBOSS Limited PMS existing portfolios that were launched in 2008, meaning past performance can be used to demonstrate a 10+ year track record for either investment solutions.
In addition, the OEIC Fund Range retains strong similarities with PMS through the same, highly experienced, management team.
It’s not all about performance though, over the past 10 years we have consistently extolled the benefits of looking after a portfolio’s defensive credentials. This consistency of investment approach has resulted in portfolios with top decile risk-adjusted returns, smoothed out volatility and lower drawdowns.
Consistent Client Outcomes over 10 years
Based on IBOSS Limited Portfolio Management Service Novia platform
31/09/2009 – 31/09/2019
Want to learn more?
For more information regarding any of our outsourced investment solutions, please do not hesitate to contact a member of our Business Development Team;
Kevin Morrison – email@example.com / 07891 814 345
Carl Rowbury – firstname.lastname@example.org / 07885 621 226
Tracey Atkin – email@example.com / 07719 327 524
Tanya Legge – firstname.lastname@example.org / 07902 307 277