Blue Chip Issue 86

BLUE
CHIP
PRACTICE MANAGEMENT | Client services
Lower-income clients
and why your practice needs them
The risks and opportunity cost of not equally servicing clients across income levels – and how to get it right.
Advisors need many clients to reach their growth and
income goals. But the greater the number of clients
added to your investment book, the harder it is to treat
all clients equally and fairly – and the harder it is to
nurture what may turn into longer-term relationships with smaller
clients whose wealth could grow in future.
The risks of service inequality
For most advisors there simply isn’t enough time and motivation to
treat a low-income client the same way as a high-net-worth client.
And this service imbalance comes at a cost to your business.
If clients are not treated fairly, they may simply up and leave for
another advisory, or worse, take their grievance to the Financial
Advisory and Intermediary Services (FAIS) Act Ombudsman,
appointed by the Financial Sector Conduct Authority (FSCA).
Lodging a complaint with the FAIS Ombudsman is a fast and
simple process for an unhappy client. After attempting to resolve
the complaint directly with the advisor, if the client is still unhappy,
they need only fill out and submit an online form and their
complaint will be lodged for assessment by the FAIS Ombudsman.
If a matter is determined to be valid, an advisor could face
substantial fines or risk their operating licence being revoked.
Even if the case is unsuccessful, there could be significant
brand damage done as claims are posted on the Ombudsman
website and sometimes even picked up by media publications
with a broad reach, further damaging the advisor’s brand and
company image.
In addition to client complaints, service and reporting
requirements are increasingly becoming a regulated aspect
of business with the entrenching of Treating Customers Fairly
protocols as well as the long-awaited Retail Distribution Review
(RDR). These current and incoming compliance hurdles will increase
the amount of productive time spent on fulfilling regulatory
requirements in your practice.
Lastly, there is an opportunity cost of not seeking out lowincome
new business or adequately servicing existing lowerincome
clients. Due to time and capacity constraints, advisors
tend to provide better levels of service to higher-income clients.
As most of these wealthier clients are closer to or past retirement,
this concentration creates longevity risk for an advisor’s book.
Leveraging technology
Making use of third-party systems that enable all clients to receive
the same level of service has an up-scaling effect for advisory
practices. Reporting is a critical client servicing touchpoint for
wealth management practices, and a vast amount of time is
spent collating and creating bespoke reports for clients on a
quarterly or monthly basis. The quality, depth and frequency of
these reports very often differ for lower-income clients and their
wealthier counterparts.
Wealth management analytics provider, Seed Analytics,
significantly reduces your time spent on regular client reporting
and communication, which opens capacity for more business. The
system seamlessly aggregates investment data across more than
60 platforms to create monthly or quarterly investment reports for
all your clients on your book – regardless of their level of wealth.
The aggregated information generated in the report is taken
through various validation checks, including fidelity and integrity
checks, which ensures better quality and accuracy. Reports can
be white labelled for your advisory practice to ensure that your
brand is top of mind.
In addition to bridging the gap in terms of the depth or
frequency of reporting across a broad spectrum of clients,
smart tech, such as Seed Analytics, also provides much-needed
business intelligence. Using data to provide a holistic view of your
client base, the technology allows you to identify key risk and
opportunities within the book –
and gives you the power to make
informed decisions around these.
Reaching a larger audience
Big institutions can write large
amounts of business through
extensive, linked brokerages
and advisors. They do this by
using standard systems to reach
their large audience. With the
proper selection of technology,
this is a world any advisor can
build for themselves.
https://www.seedanalytics.info/
Andries de Jongh, Sales and Key
Account Manager, Seed Analytics
44 www.bluechipdigital.co.za