Over 4 years ago* I posted a discussion on the FPA Members Forum questioning the effort required to generate an FDS and also sought feedback on the format that advice businesses would adopt. What I proposed was that in the 'model office' the production an FDS shouldn't be a challenge, rather it should be seamless and virtually effortless. Further, the exercise should potentially be viewed as another opportunity to demonstrate your value to your client, and therefore an opportunity to generate a referral. Well it seems that 4 years on not everyone is positioned to raise their hand when asked the question: "Will you be positioned to produce your Annual Fee Disclosure Statement in one-click or less?"
What does 'good' look like?
To get the ball rolling this is the template output which was created that I sought feedback on and the following outlines the 'effort' that was required to put this 'into my clients hands':
- Firstly, a nightly Alert uses the client's 'Next Disclosure Statement Date' to determine when it will trigger a follow up Task,
- The Task, once triggered, automatically generates the FDS, attaches same to an email and sends it off (naturally this exercise also stores a copy of same against the client's File Notes), and finally
- Upon completing the Task, the Task 'Outcome' automatically sets the 'Next Disclosure Statement Date' to 12 months into the future.
Now technically, the Task could generate the FDS for review and only send it once the Task is 'completed' with an 'Outcome' of 'Approved'. It could also be manually generated (it kills me to type those words) or incorporated into your review process workflow.
A key contributor to its efficiency is the fact that it extracts Notes (see 'eNewsletters), Diary Events (see 'Meetings') and Tasks (see 'Professional Services') from the client's records before combining CommPay records to detail the 'Summary of adviser fees' (yes, I have included commission payments, but like all the elements in this document they could be easily filtered out).
Whilst this FDS could readily include Service Benchmarks I deliberately steered away from using them as I perceived issues for 'A' and 'B' style clients (think they work well for Cs and Ds). The concern I had was that your typical A/B wouldn't necessarily be utilising all the services you had on offer every year and create unintended consequences in the presentation. I somewhat struggle with the concept of detailing 'what you are entitled to receive' (for a 'full service' client) but readily accept that it is a requirement. There are examples of services that you would provide for a 'good' client which aren't necessarily on your standard menu. There are also many examples of services that do fall into your standard menu that aren't utilised very frequently (eg. assisting the family/surviving spouse in the case of death). Does it necessarily make sense to list all these services in the FDS? Perhaps a nicely crafted statement which highlights that you provide 'holistic' services might be more appropriate, reinforce your interest in helping the client achieve their goals, and provide something that doesn't look like you're trying to keep score?
In past communications with ASIC staff (I was questioning why a number of 'legal opinions' suggested that Opt-in and FDS' had to be 'communicated' to clients using the 'traditional letter in the post' approach) it was highlighted that ASIC will look to ensure that the law has been complied with. Therefore, if the regulation was to state, 'you must provide a list of the services that the client was entitled to receive' you would be expected to provide 'a list'. This is not however stated. Naturally, as I have no legal qualifications or formal training, my opinion is only 'an opinion'. If your licensee has stated that they expect you to 'provide a list' Service Benchmarks are certainly a very valid approach to address same. Just make sure your you take into consideration the impact (on the client) of listing too many services that aren't utilised, or far too few (creating the perception of little benefits for the fees charged).
* The discussion "Will you be positioned to produce your Annual Fee Disclosure Statement in one-click or less?" was posted on February 1, 2013.