solicitors - why refer?

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Slide 1

Whats in it for them?

Working with the Financial Planning profession

A presentation by Basi & Basi Financial PlanningWhats in it for them?1Key pointsMost solicitors will have some form of relationship with an independent financial adviser even if it is simply a matter of giving clients the phone number of a local firm they know But with the Legal Services Act, solicitors are facing increased pressures to become more commercial and to take their client proposition beyond traditional transactional workAs a result, the importance of a strong relationship with an experienced and highly-qualified IFA is likely to increaseIn this presentation we want to highlight how working with an IFA can potentially enhance a solicitor firms client offering We also show how solicitors can learn from established IFA working practices in order to build more focused and resilient businessesWho are we?A Flying History1994; Ady Basi qualifies as Investment Adviser2001; Ady Basi creates IFA Stop Limited2002; Michael Basi graduates and joins FCE Bank plc2006; Michael Basi rejoins family firm2010; Nicholas Basi graduates and joins family firmCapacityThree advisers and one traineeAdministration StaffFocus on personal service to a few clients and their familiesWhats in it for them?2Key points:- You may have heard of the Retail Distribution Review and for anyone authorised to advise on investments, it is currently consuming a lot of attentionQuite simply, the RDR is looking to banish investment misselling first by making clear which advisers are independent and which are not; second by completely eradicating product commission; and third by imposing new professional standard on those looking to call themselves independent For IFAs who are fee-based and highly-qualified, the RDR may involve very little change but it is anticipated that the proportion of advisers calling themselves independent may fall dramatically from 2012/2013 at least initially.

Managing Wealth; Our Key SkillWide ranging term what does it mean?Ensuring a clients financial assets support their life plansAiming to make investments work hardWorking to minimise tax dueProtecting succession planningFocus 1; Asset AllocationSplit according to true level of risk client wants to takeFocus 2; Fund SelectionUsing strategically designed mathematical analysis, monitored dailyFocus 3; Tax strategiesDont let the tax-tail wag the investment dog!Whats in it for them?3Key points:- You may have heard of the Retail Distribution Review and for anyone authorised to advise on investments, it is currently consuming a lot of attentionQuite simply, the RDR is looking to banish investment misselling first by making clear which advisers are independent and which are not; second by completely eradicating product commission; and third by imposing new professional standard on those looking to call themselves independent For IFAs who are fee-based and highly-qualified, the RDR may involve very little change but it is anticipated that the proportion of advisers calling themselves independent may fall dramatically from 2012/2013 at least initially.

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 investors 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.

Whats in it for them?Lies, Damned Lie and StatisticsOur view is that prior growth proves a theory; service defines executionAgain, we focus on client service;Unique Fee-based remuneration model Disperses income over years of voluntary retention by clientLinked to their investment performance; they win, we winClient can select service level:BronzeSilverGoldPlatinumPersonal adviser access for all clients (Platinum: 18 hours per day)

Whats in it for them?5Key points:- You may have heard of the Retail Distribution Review and for anyone authorised to advise on investments, it is currently consuming a lot of attentionQuite simply, the RDR is looking to banish investment misselling first by making clear which advisers are independent and which are not; second by completely eradicating product commission; and third by imposing new professional standard on those looking to call themselves independent For IFAs who are fee-based and highly-qualified, the RDR may involve very little change but it is anticipated that the proportion of advisers calling themselves independent may fall dramatically from 2012/2013 at least initially.

We are Independent - what does it mean?1986Financial Services Act polarises of financial advice

2005Financial Services Authority allows depolarisation to increase high-street choice

2012/13Retail Distribution Review recategorises retail investment advisers

IndependentTiedIndependent*TiedMulti-TiedIndependentRestricted*must offer a fee option to be called independent otherwise called whole of marketWhats in it for them?6This slide shows how the definition of an IFA has evolved The concept of an IFA was first established with the Financial Services Act in 1986 creating a clear polarization between advisers who were whole of market and those who were tied representatives of a particular companyIn 2005 advisers were redefined into three camps independent, tied or multi-tied primarily to accommodate the advice model of high-street banks and aiming to provide a practical compromise between full independence and tied salesHowever that compromise is now being swept away. The ongoing Retail Distribution Review means that, from 2012, someone providing investment advice to retail investors can only be called independent if they are able to advise across the whole product spectrum. Otherwise, they are called restricted.This sounds like we have come full circle back to 1986 however the Retail Distribution Review is aiming to shake up the investment advisory professionals in a number of other ways too.

Retail Distribution Review your 10-second guideLaunched by the Financial Services Authority in 2006Aims to improve and modernise how investments are distributed to retail consumers in the UK Three main goals:Improve the clarity with which advisory firms describe their services to consumers Address the potential for adviser remuneration to distort consumer outcomes Increase the professional standards of investment advisersFirms must be compliant from end of 2012For source information see: www.fsa.gov.uk/pages/About/What/RDRWhats in it for them?7Key points:- You may have heard of the Retail Distribution Review and for anyone authorised to advise on investments, it is currently consuming a lot of attentionQuite simply, the RDR is looking to banish investment misselling first by making clear which advisers are independent and which are not; second by completely eradicating product commission; and third by imposing new professional standard on those looking to call themselves independent For IFAs who are fee-based and highly-qualified, the RDR may involve very little change but it is anticipated that the proportion of advisers calling themselves independent may fall dramatically from 2012/2013 at least initially.

Change is good....eventuallyWhat 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 professionJune 2006Launch of the Retail Distribution ReviewNovember 2007Implementation of the EUs Market in Financial Instruments Directive (MiFID)December 2008All retail financial services firms required to demonstrate Treating Customers Fairly principlesJanuary 2013Investment firms must be fully compliant with RDR policyDecember 2005 FSA proposes principle-based regulationApril 2009EC announces plansto improve investor protection for packaged retail investment products (PRIPs)December 2013Minimum capital adequacy requirement for personal investment firms raised to 20,000The 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.Whats in it for them?8Key points:IFAs have had to learn how to contend with major and unrelenting commercial, market and regulatory pressures and that is experience that many IFAs are keen to share with their solicitor peers.IFAs have had to learn how to become commercially minded to fend off competition from other advisory segments, including in-house tied advisers in banks and building societies, insurers and also growing competition from the direct execution-only financial planning marketLikewise, IFAs have had to become adept at accommodating major regulatory changes and initiatives from MiFID to Treating Customers Fairly and the ongoing Retail Distribution ReviewAnd just as the Solicitors Regulation Authoritys is looking to overhaul its Code of Conduct, shifting from rules-based to principle-based regulation so this is something that IFAs have had to contend with for almost five years now. Indeed we understand that the chief architects of the revised SRA Code of Conduct come from a background in