Solicitors - Why Refer?


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Solicitors - Why Refer?

  1. 1. 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
  2. 2. What’s in it for them?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
  3. 3. What’s in it for them?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!
  4. 4. What’s in it for them?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
  5. 5. What’s in it for them?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)
  6. 6. What’s in it for them?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’
  7. 7. What’s in it for them?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:
  8. 8. What’s in it for them?Change is good....eventually“What does not destroy me, makes me strong. [Or, What doesnt 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.
  9. 9. What’s in it for them?What will it require to be an Independent Financial Adviser post-RDR (RetailDistribution 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
  10. 10. What’s in it for them?Maintaining your client relationship; Harnessing the full client lifecycleThe graph below shows an example of life cycle of an individual in the UK, and the potential opportunities for Independent Financial Advisorsand Solicitors. As you can see, throughout the life cycle there is continuous overlap between the services we the Independent Financial Advisorand 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
  11. 11. What’s in it for them?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
  12. 12. What’s in it for them?Where do Solicitor/ Independent Financial Advisers synergies lie?Synergies could lie at any point where legal advice meets financial advice. Such as: 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
  13. 13. What’s in it for them?Where do Solicitor/ Independent Financial Advisers synergies lie?Synergies could lie at any point where legal advice meets financial advice. Such as: 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 Solicitor Independent Financial Advisers
  14. 14. What’s in it for them?Where do Solicitor/ Independent Financial Advisers synergies lie?Synergies could lie at any point where legal advice meets financial advice. Such as: 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 Solicitor Independent Financial Advisers
  15. 15. What’s in it for them?Where do Solicitor/ Independent Financial Advisers synergies lie?Synergies could lie at any point where legal advice meets financial advice. Such as: 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 Solicitor Independent Financial Advisers
  16. 16. What’s in it for them?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
  17. 17. What’s in it for them?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
  18. 18. What’s in it for them?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
  19. 19. What’s in it for them?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
  20. 20. What’s in it for them?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
  21. 21. What’s in it for them?3. Client segmentation – aiming to improve profitability, anticipate futurebusiness 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)
  22. 22. What’s in it for them?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
  23. 23. What’s in it for them?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)
  24. 24. What’s in it for them?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 to discuss the points raised in this slide show further. Thank you.