Solicitors - Why Refer?

What’s in it for them?

What‟s in it for them?
Working with the Financial Planning profession

A presentation by Basi & Basi Financial Planning


Who are we?

• A Flying History
– 1994; Ady Basi qualifies as Investment Adviser
– 2001; Ady Basi creates IFA Stop Limited
– 2002; Michael Basi graduates and joins FCE Bank plc
– 2006; Michael Basi rejoins family firm
– 2010; Nicholas Basi graduates and joins family firm

• Capacity
– Three advisers and one trainee
– Administration Staff

• Focus on personal service to a few clients and their families


Managing Wealth; Our Key Skill

• Wide ranging term – what does it mean?
1. Ensuring a client‟s financial assets support their life plans
2. Aiming to make investments work hard
3. Working to minimise tax due
4. Protecting succession planning

• Focus 1; Asset Allocation
– Split according to true level of risk client wants to take

• Focus 2; Fund Selection
– Using strategically designed mathematical analysis, monitored daily

• Focus 3; Tax strategies
– Don‟t let the tax-tail wag the investment dog!


Invested is Invested, Balanced is Balanced?

The above are net figures and do not take into account any advice fees. These begin at 3% of the initial amount and 1.0% for on-going
service, which can be varied to suit the needs of the client accordingly.

THE FIGURES REFER TO PAST PERFORMANCE. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE RESULTS.
The performance data quoted represents past performance and does not guarantee future results. The investment return and principle value
of an investment will fluctuate, thus an investor’s shares, when redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than return data quoted herein. For information current to the most recent month-end, please visit
http://advisor.morningstar.com/familyinfo.asp.


Lies, Damned Lie and Statistics

• Our view is that prior growth proves a theory; service defines execution

• Again, we focus on client service;
– Unique Fee-based remuneration model
– Disperses income over years of voluntary retention by client
– Linked to their investment performance; they win, we win

• Client can select service level:
– Bronze
– Silver
– Gold
– Platinum

Personal adviser access for all clients (Platinum: 18 hours per day)


We are Independent - what does it mean?

1986

Financial Services Act polarises of financial advice

Independent Tied
2005

Financial Services Authority allows depolarisation to increase high-street choice

Independent* Tied Multi-Tied
2012/13

Retail Distribution Review recategorises „retail investment advisers‟

Independent Restricted

*must offer a fee option to be called independent – otherwise called ‘whole of market’


Retail Distribution Review – your 10-second guide

• Launched by the Financial Services Authority in 2006

• Aims to improve and modernise how investments are distributed to retail
consumers in the UK

• Three main goals:
1. Improve the clarity with which advisory firms describe their services to
consumers
2. Address the potential for adviser remuneration to distort consumer outcomes
3. Increase the professional standards of investment advisers

• Firms must be compliant from end of 2012
For source information see: www.fsa.gov.uk/pages/About/What/RDR


Change is good....eventually
“What does not destroy me, makes me strong. [Or, What doesn't kill you makes you stronger.].” -
Friedrich Nietzsche

Independent Financial Advisers understand the headwinds facing the legal
profession

4000 April 2009 December 2013
EC announces plans Minimum capital
June 2006 to improve investor adequacy requirement
protection for packaged for personal investment
3000 Launch of the Retail
Distribution Review retail investment firms raised to £20,000
products (PRIPs)

2000
January 2013
November 2007 Investment firms must be
1000 Implementation of the EU‟s fully compliant with
December 2005 Market in Financial RDR policy
December 2008
FSA proposes principle- Instruments Directive (MiFID)
All retail financial services firms
based regulation
0 required to demonstrate Treating
Customers Fairly principles

Jun- 05 Jun- 06 Jun- 07 Jun- 08 Jun- 09 Jun- 10

The graph above shows non-accurate 5 year FTSE 100 performance, with accurately dated regulation changes. This graph is purely for
information only and no indication regarding FTSE 100 or investment, past, present or future performance should be taken from this. This
is purely for time-line purposes to indicate regulatory changes.


What will it require to be an Independent Financial Adviser post-RDR (Retail
Distribution Review)?

• From January 2013, an „Independent Financial Adviser‟ must:
– hold qualifications at a minimum level of QCF Level 4*
– conduct a fair and comprehensive analysis of the relevant market
when making product recommendations
– have sufficient knowledge of all types of „retail investment product‟ that could
give a suitable outcome for a client
– select products in line with the „client‟s best interests‟ rule (COB 2.1.1)
– NOT accept commission from product providers
– operate a product-neutral pricing structure
– establish customer agreed remuneration

• Basi & Basi Financial Planning Ltd is set to be in place long after 2013

*Qualifications and Credit Framework


Maintaining your client relationship; Harnessing the full client lifecycle
The graph below shows an example of life cycle of an individual in the UK, and the potential opportunities for Independent Financial Advisors
and Solicitors. As you can see, throughout the life cycle there is continuous overlap between the services we the Independent Financial Advisor
and you the Solicitor can provide to a client, at differing life stages and events.
Independent Financial Adviser/Basi & Basi Financial Planning activities shown in white; solicitor/Your activities shown in orange

Buy first Get Have Move Change Receive RETIRE
house married family house jobs inheritance

Mortgage/ Spousal Set up children‟s Probate
Inheritance Tax &
repayment advice tax-planning investments & Child Review Wills
estate
Conveyancing Write Wills Trust Funds Review trusts
planning
Review Wills Review trusts
Set up trusts

Lump sum
investment
Client asset value

Refinance Long-term care
Conveyancing Equity release
Family
cover

Regular School fees Arrange SIPP Pension Pension Income Annuity purchase
savings planning maximisation/cons de-risking drawdown
pension olidation

Annual Annual Annual Annual Annual Annual Annual
portfolio portfolio portfolio portfolio portfolio portfolio portfolio
review review review review review review review

Annual Individual Annual Individual Annual Individual Annual Individual Annual Individual Annual Individual
Savings Account Savings Account Savings Account Savings Account Savings Account Savings Account
purchase purchase purchase purchase purchase purchase

20 30 40 50 60 70 80
Client age


Where do Solicitor/ Independent Financial Advisers synergies lie?
Synergies could lie at any point where legal advice meets financial advice. Such as:

1. Trust & estate planning

Will writing Portfolio construction
Balancing interests
Trust creation
& administration* Inheritance
tax planning
Probate
Ethical investing
Remember:
Estate disputes (e.g. for charities) The Trustee Act 2000
obliges trustees to review
any investments made
with trust money on a
regular basis and to
Solicitor Independent obtain proper investment
advice.
Financial
• NB: Where acting as trustees, solicitors should not refer trust work to
businesses in which they have an interest Advisers



2. Medium to High-net worth clients

Wealth management
Trusts & asset
protection Alternative investing
Estate management School fees planning
Pre-nuptial agreements Tax-efficient planning
Corporate asset Pension planning
structuring
Insurance

Solicitor Independent
Financial
Advisers



3. Elder care planning

Power of Attorney Long-term care insurance

Trusts Equity release
product selection
Will-writing
Impaired annuities
Equity release guidance
Income solutions Remember:
Only financial advisers
that hold the CF8 Long-
term Care Insurance
qualification can advise on
long-term care products
Financial
Advisers



4. Personal injury and divorce settlements

Litigation Lifetime income planning
Claims settlement Tax planning
Award assessment Family financial planning
Trust creation & Pension planning
administration
Insurance

Financial
Advisers



5. Corporate & employer services

Employer & group
Employment law
pensions
Corporate structure
Employee benefits &
Client/supplier contracts share schemes
Intellectual property Workplace/director
financial planning Remember:
Selling/insolvency
Insurance From 2012, employers will
be required to enrol all
eligible employees into a
qualifying workplace-based
pension scheme
Financial
Advisers


Using knowledge of our clients to build and enhance our businesses

• Supports firms aims to both meet regulatory compliance requirements and build better businesses

• Requires client information to be shared across the business and not kept to one adviser/partner

• Technology essential to ensure data is up-to-date and easy to interrogate

Client Fact Find
80

70

60

50

40

30

20

10

0
Pensions ISAs Bonds Cash Funds Ot her

1. Client 2. Sales Management 3. Client
Fact Find Information segmentation
Deep-dive knowledge of A real-time picture of a Build a business around
every client business genuine client needs


1. The Client Fact Find – a powerstore of information

Independent Financial Advisers are required to take reasonable steps to ensure that a recommendation is
suitable for a client. Before making recommendations or managing investments, an advisory firm must
demonstrate that they “know their client” by obtaining and documenting the necessary information regarding:

• Client’s financial situation – including
- source and extent of regular income
Client Fact Find - regular financial commitments
- assets, including liquid assets, investments and property

• Client’s investment objectives – including:
- length of time for investment
- preferences for risk-taking
- risk profile
- purpose of the investment

• Client’s relevant knowledge and experience – including
- familiarity with relevant services, transactions and investments
- nature, volume and frequency of transactions
- level of education and profession

Taken from FSA Conduct of Business Sourcebook Section 9.2


1. The Client Fact Find - maximising the advice opportunity

Client assets
Time horizons
Are these all properly
Are investment strategies
balanced with a
appropriate to the time left
cohesive strategy?
available for investment?
(ongoing review)
Client Fact Find
Dependants and spouses
Are all personal and
investment allowances Risk profile
maximised across the whole Is the current portfolio
family? aligned with the client‟s
stated risk profile and
preferences?

Pension arrangements
Are all these optimised in
Financial commitments
terms of
Are assets and liabilities
performance, charging
being offset as efficiently as
structure and ease of
possible?
management?

Turning a regulatory requirement into a commercial and client advantage


1. The Client Fact Find – using it to target solicitor issues

Wills
Have wills been written
by the individual and their
partner and are these up-to-
date (e.g. post-divorce or
Client Fact Find birth)

Estates
Are there any assets to be
passed onto a dependant/ family
member. How are these
currently protected?

Transactions
Does the individual face any
imminent property, business
Elder care
or commercial transactions?
Does the individual have any
obligation to any older relatives –
how are their future needs
managed?

With client approval, Independent Financial Advisers can share fact finds with solicitors, thereby
providing them with regular and comprehensive client information


2. Management Information (MI)

Independent Financial Advisers use software and investment-platform tools to maintain a real-time picture of:

• Level of client activity – including most recent transactions

• Client activity by adviser/office/whole business

• Clients with unused ISA and pension allowances

• Investment asset allocation by client/adviser/whole business

• Assets held per provider provider/investment group/product
80
• Gross and net asset inflows/outflows
70

60 • Monthly/quarterly/annual revenues by client/adviser/office
50

40 • Client bank by age/AUA*/professional profile
30

20 • Transfer activity from/to other advisers/providers
10

0
• Length of client retention
Pensions ISAs Bonds Cash Funds Other

Assess individual Leverage client data Track profitability by Be alerted to sudden Identify potential
adviser performance across the whole client/ adviser/office outflows of business risks (e.g. high client
business exposure to high
risk assets)
*Assets under advice


3. Client segmentation – aiming to improve profitability, anticipate future
business direction and give clients what they need

Use the client fact find and This enables us to: Which in turn allows us to:
business Management
1. Anticipate future needs across the
Information to segment &
whole client bank accurately and
cross-segment clients by:
position business accordingly
Anticipate client needs
Age by life stage
2. Increase retention potential of high-
Identify current and future quality/high-value clients and increase
Asset level/profitability high net worth clients referral of new ones

3. Deploy resources efficiently to each
Transaction frequency/
area of financial planning and each
objective/key concern
client type
Differentiate advice services/
marketing/
Financial behaviour/ communications 4. Identify and build key areas of expertise
portfolio complexity by individual client needs to build clear proposition, culture and
brand

Professional profile
5. Ensure each client pays fairly for the
service they require (i.e. no cross-
subsidies)


Segmentation in action

For example, client profiling may tell us Our key client segments are:
that: 1. Young accumulators:
- Provide tax-efficient, growth focused
30% of our clients are professionals in their
strategies
30s-50s with fast-accumulating portfolios
- Keep up to date with new investment
opportunities and ideas
40% of our clients are over 60 with - Focus on online servicing
portfolios of £400,000+ - Address life-stage financial planning

2. High-net-worth retirees
10% of our clients are annual ISA buyers - High touch relationship with focus on
with few other assets with us regular face-to-face contact
- Focus on tax and estate-planning
- Income and risk-averse strategies
- Strong potential for client referral –
including from family members

3. Transactional investors
- Focus on efficient but low-cost servicing
- Email with investment ideas and stock
market commentary
- Invite for portfolio review and assess
consolidation potential
N.B. This information is for illustrative purposes only


Other potential joint activities

Client newsletters Client & prospect seminars Workplace
advice
• Budget updates • Planning for a secure
retirement • Getting the most from your
• End of tax year ISA and
pension
pension reminders • Managing a divorce
• Employee share schemes
• Stock market reviews & • Funding old-age care
model portfolios • Life-after-work planning
• Passing on your estate
• Personalised portfolio • Wealth management for
• Asset protection (High Net
reports and valuations directors
worth Individuals)


What‟s in it for you?

Together our aim would be to:

1. Reinforce long-term high-value high quality client relationships

2. Attract more clients within preferred market segment(s)

3. Improve levels of client referral

4. Increase levels of business from existing clients

5. Maximise efficiency and profitability

6. Build a holistic advice proposition

Transform threats to the legal sector into opportunities - The forthcoming changes are a
welcome reminder of the need to change in a positive manner.

Call us on 01277 500053 or email us at advice@basiandbasi.co.uk to discuss
the points raised in this slide show further. Thank you.

Solicitors - Why Refer?

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