One thing’s for sure, if you’re a financial adviser there’s no getting away from Consumer Duty for the foreseeable future. And, depending on which of the latest pieces of research you read, the industry is either almost completely ready or isn’t even close. But there’s one thing almost everyone can agree and that is that it’s going to create a lot of extra work! In fact, according to Quilter research, gathered by Boring Money, 44% of advisers may feel forced to increase customer fees if they are going to maintain their profitability. Similarly, financial institution iPensions Group reported that 76% of advice firms have already seen their costs increase as they prepare for the Consumer Duty 31 July deadline.
But, given that the country is currently experiencing a significant ‘cost of living crisis’ now might not be the best time to ‘pile a little more pressure’ onto your clients. Some might still be reeling from the rise in interest rates that have seen average mortgage payments increase by several thousand pounds a year. And, even those with little or no mortgage commitments that are closer to retirement will probably have seen the value of their pension pots reduced by the big fall in bond prices. And, then, of course, there are the FCA’s expectations for the Consumer Duty. I’m pretty sure they won’t want the result of their requirement to deliver ‘Fair Value’ to result in a price rise!
So, what should adviser firms do? Well, there are two options. First, you can look to reduce your costs and second, you can look to increase your productivity.
You should of course, periodically review your costs as, over time, things change, and what once seemed an indispensable expenditure quietly becomes redundant. For example, are you still paying for software licenses that you no longer use or don’t use much? A thorough review of your cost base is always worthwhile but, on its own, it rarely gets to the heart of the issue within your business. To achieve that you need to look at ways of enhancing your productivity.
One well-proven way for most adviser businesses to increase their profitability is to ensure that they use their own internal resources to focus on those functions that need their particular knowledge, and which add the most value; routine administrative tasks should, if possible, be automated or outsourced to those that can create their own scale economies. A good example is income reconciliation. It’s a task that all adviser firms need to perform but which doesn’t require specialist financial planning skills, nor does it need to create and build lasting relationships with the adviser firms’ clients. However, what it does need is a deep pool of resources, skills, knowledge, and understanding of the ‘dark arts’ involved with matching monies received to income expectations within the wealth management industry. It also needs specialist knowledge of the host of management reporting that is now required by a broad range of interested parties including the FCA.
Most small firms struggle to create and maintain the depth of specialist skills that are required to perform this function efficiently and consistently putting the business under strain especially when key staff are on holiday or decide to leave the business. As so many Jigsaw Tree clients have found outsourcing their income reconciliation activities has not only saved them significant amounts of time it has also removed the stress of performing this critical business function in-house.
So, if you’re struggling with Consumer Duty implementation why not consider outsourcing your income reconciliation to Jigsaw Tree and give your business the room it needs to focus on those tasks that really make a difference to your clients?
Visit our income reconciliation page for more information, testimonials, and case studies. You can also call us on 0800 246 5416, or email hello@jigsawtree.com and we will be only too pleased to speak with you.