How tech is reshaping the adviser fact find

By Michael Klimes

Go to the profile of Money Marketing
Nov 09, 2018

Fact finds can seem like a thankless task, but uncovering and documenting a client’s needs and objectives is one of the key skills advisers need in the modern profession.

Winning a client’s trust is important as advisers need to collect all the necessary information about them to make a suitable recommendation. This includes information about the client’s knowledge and experience, financial situation and investment objectives.

Advisers Money Marketing spoke to can be divided into two categories when it comes to creating fact finds. Some firms have a standardised approach that does not discriminate between clients, while others take a range of approaches to clients based on personal circumstances or needs.

But they all believe technology can help speed up the fact find process and recognise that its use has grown over the years.

One veteran adviser says the increased use of technology in fact finds is evidence of the shift from the sales cultures of the 1990s, where soft skills were emphasised, to the professional culture that exists now.

Last year the FCA ruled out introducing a mandatory standardised fact find for advisers in a consultation on streamlined advice and the fact find process.

The consultation said the length of the fact finding process can add to the cost of advice, and could discourage clients from switching advisers because they would have to go through the process again.

The finalised guidance that followed the consultation is not binding and is designed to help firms comply with FCA rules, not to introduce new standards. The key message is adviser firms must use their own discretion to do fact finds in a way that best serves clients and complies with the rules. The watchdog also points out that advisers themselves are best placed to make this decision.

So how has the fact find process changed over the years and how are advisers managing it today?

Stripping back the layers
Verve Investment Planning principal Steve Buttercase says that he has seen considerable change in the behaviour of advisers when it comes to fact finds. This change is partially driven by developments in technology, but also the regulatory framework and culture.

Buttercase argues all of these factors have influenced the approach advisers take to the fact find, as not only does it have to contain a client’s personal information but they also must register their emotional needs.

He says: “The industry has changed hugely from 25 years ago when there was a sales environment that demanded soft skills to forge successful human relationships. Now the environment has become more professionalised and advisers must get qualifications.

“The onus has shifted from ‘this is what the client said’ to ‘your duty is to find out everything which is relevant to that client’. Advisers are more like doctors and solicitors now who use efficient note taking and record keeping.”

While technology allows the data in fact finds to be recorded more efficiently and accurately, Buttercase says advisers should remember they must always get to know their client themselves. He adds technology has a part to play but no data will ever replace the human insight needed to understand a client’s emotional and psychological needs.

Beliefs about what technology can do and where the limits are shape views on how people think it should be deployed in fact finds. Dunstan Thomas director of retirement strategy Adrian Boulding says there is nothing more boring for a client than an adviser sitting in an initial meeting having to deal with paperwork.

To make the process more efficient for the adviser and client, he suggests technological solutions can be used to do the manual work.

He says an adviser could consider sending a client a form online before the first meeting and then extract further information in the face-to-face meeting.

Postcard Planning director Rohan Sivajoti, who co-founded NextGen Planners, says he does this the other way around at his firm, where there is an initial face-to-face client meeting without prescribed questions, followed by an online fact find questionnaire.

These answers are then checked for accuracy. Sivajoti says it usually takes a client 15 to 20 minutes to fill in the form and a matter of minutes to check if the information is accurate.

The complexity of the task the client asks the adviser to do does not affect the duration of the fact find.

He adds: “Clients are more comfortable giving away personal information after they have met you. Can you imagine if you as a client were asked to give out really sensitive information before you have met a financial adviser?

“I try to get soft facts from the client in the first meeting such as what their hobbies and interests are. Then the online form gets the hard facts from the client, such as how much pension savings they have and their National Insurance number.”

Postcard Planning sends over the link to the online fact find questionnaire for the annual review to see if anything has changed so the client’s records are kept up to date.

Sivajoti says the NextGen Planners group is seeing a lot of its members shift to online fact finding, which has saved significant amounts of time and improved record keeping.

KW head of wealth David Inglesfield says technology can make fact finds more efficient and his firm is rolling out an iPad-based adviser platform that receives client information, keeps fact finds up to date and allows clients to see portfolio reporting on their screens.

He adds clients find it more appealing to look on an iPad rather than a laptop, and fact finds help demystify the whole advice process.

Testing the water
Susan Hill Financial Planning chartered financial planner Susan Hill is another veteran IFA, and says different approaches for fact finds are sometimes a requirement for different clients she has.

This is because she deals with high net worth clients who require complex pension advice that is very labour-intensive to produce.

She segments clients, with different questions for those in retirement, post-retirement, and ones for later life that deal with social care matters.

All of these fact finds have questions about attitude to risk but the one for defined benefit transfers is the most detailed of all.

It has more questions about comparing the security of the guaranteed benefits being given up with what investment strategy is needed to replenish them. Hill argues the sheer amount of pensions legislation combined with the lack of competence from third-party administrators when it comes to giving correct client data makes it harder to do the fact find.

This can be particularly tough for young advisers working on pensions who cannot put all the changes arising from legislation, such as the changes to contracted out benefits, in context when building a profile of a client.

Hill gives the example of clients over the annual allowance who suffer the tax implications from poor record keeping at pension schemes as something that is tricky to keep on top of.

There are other issues, such as the scattered nature of clients’ pension savings and the poor communications some providers send to policyholders.

Hill says: “I have one client who has seven different pensions with seven different providers. I had to write to all of them to get information but they do not always have the right answers or understand their own policies.

“Reponses to requests for information like this mean I have to go into the individual policy of clients and I have to read them and that takes a huge amount of time. But, fundamentally, the fact find is the most important way for me to know what a client has got pensions-wise.”

Can technology make the problems Hill has described go away completely for the fact find?

She says streamlined advice such as robo or automated solutions can work for the accumulation phase in a client’s journey.

However, the complexity of decumulation means a client needs to take advice from a flesh and blood financial adviser and not a robot. That will require the adviser to engage with a client’s history more intensely than those with other needs.

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