Opt-In Agreemnts how compeling will yours look?
Opt –in Agreements
By Brian Boggs
The measure which requires advisers to get retail clients to sign an opt-in contract for the
Continuation of advice services, is part of the recommendation in the future of financial reforms,
Scheduled to apply from July 1st 2012.
So let’s consider the implications, the client can and may choose not to engage your services for another year, so have you been paid enough for your intellectual property {advice} so far?
If your advice has been transactional then the client may very well believe that the task has been completed, if its life risk for example have you sold the client on your claim service? The value that you will add in the event of a claim, the service that you will continue to consider terms and conditions that may be more suitable, these are valid reasons why a client should continue to engage with you.For clients that you manage their investments how you position the financial journey is critical, if you have sold the value of the ongoing advice you will be providing at important
Stages of the financial journey ,your company has demonstrated a documented service then you should not have a concern that the client would not continue to do business with you ,in fact what a great opportunity to demonstrate your company’s unique value proposition all over again and ask for referrals, you see people will leave you for perceived indifference ..If they think you don’t care they
Will believe you don’t care and vote with their feet, so say what you do and do what you say.
For example retirement planning is in two parts pre and post retirement a client will require ongoing advise for maybe 20-30 years ,your explanation of the services that your company provides needs to be very clear, concise and your fee method transparent.
Advisers that may have taken some comfort from commissions being grandfathered need to be concerned that their entire book of clients may choose to not sign the opt-in agreement, if this were to happen consider the consequences to your business and ongoing fixed costs ,how’s that 5 year lease you have just signed? Focus has been on the opt-out agreement where the client can turn off the commission or fee, this opt-in agreement has far reaching considerations that obviously affect the future profitability of your advice practise.
Now is the time to consider and design your new business model, educate your clients on your U.V.P
[UNIQUE VALUE PROPERSITION] educate them that advice is a financial journey, it’s not appropriate to get off the bus at the wrong stop e.g. a client panicking and wanting to cash in everything every time the market turns, this is a common concern, but a well educated client acknowledges that markets both rise and fall, and that its time in the markets not trying to pick market timing holds true. So what of those clients that you do not have a relationship with your c&d book, how many of these do you have? What percentage of the whole business do they make up? What would be the impact if they all decided to opt-out or not opt-in? Will you keep them? Sell that part of the book now? This group of clients may choose to not take advice because they do not wish to pay for it
Because they don’t understand the pain of the consequence of not taking sage advice ,lawyers are kept very busy fixing problems expensive ones that could have been prevented by good advice in the first place. Some of these clients will most likely transact their need for financial product solutions over the net, the product manufactures and other interested providers are quickly moving to fill this perceived need, and fair enough because if you do not have a relationship with a client can you expect to be continuing to receive a commission or a fee?
How many fee paying clients can your practise provide an ongoing service to?200-500? Have you considered what staffing? What recorces? How about billing and debtors? All sound new?then take
Some advice engage with a mentor a coach that will help you thru this process contact us for further information on how we can help you.
