Post RDR, Chartered Financial Planner Susan Hill took the daunting decision to move from her previous role with a leading wealth management company to set up her own financial advice business, moving from the ‘restricted’ to independent status.
She was starting from scratch in terms of building up a client base; which in some ways has been “helpful” in that she had no legacy to worry about so has been able to segment clients and stay true to the segment cameo.
Her business challenge
Susan has a centralised investment proposition and so uses a set of model portfolios. As the sole adviser, however, Susan does not have a team to help her to carry out the detailed research and analysis needed to design and monitor the model portfolios. It was therefore really important to have access to independent software, not influenced by any of the main fund providers, to support her in this – to allow her to analyse clients’ existing and any recommended portfolios.
The software she chose to support this function was FE Analytics, which she describes as “essential to my business and really important in providing accurate data.”
FE Analytics: breadth and depth of functionality
Susan had used FE Analytics in her previous role but had access to only a subset of its functionality there. Once she took out her own subscription, she realised that FE Analytics contained so much more than she had thought. Indeed, she estimates that she is probably still using only about 40% of FE Analytics’ total functionality, because it offers so much and advisers have their favourite bits.
“It really opened the door for me. I have access to a range of data, which allows me to look at a deeper level at the volatility of funds and analyse both past performance and forecasts for the future. That’s been really important in building a picture for the client and helping me to keep their portfolio on track.”
Helping to win new clients
As her business is still relatively new but growing rapidly, Susan uses FE Analytics to demonstrate the value of her proposition to new clients.
FE Analytics incorporates a wealth of investment reporting and presentation tools, which can be used to illustrate to new clients the potential benefits when considering an alternative proposition.
She uses FE to produce custom built reports, which she includes as part of her presentation. The report allows her to show the portfolio to the client at a strategic and at a tactical level, so they have diagrams as an overview as well as drilling down into more specific detail. The interactive performance graph is always a client-pleaser, especially when shown on an iPad. Susan spends a lot of time talking to her clients about asset allocation - and the variety of reports helps her to reinforce her proposition in a bespoke way for each client without creating burdensome administration. The reports carry her own branding and are client-specific, which reflects her firm’s professionalism. She also says they satisfy the compliance need.
She likes the fact that FE Analytics allows you to select the fund factsheets or KIID, so she can use this detailed information to gives clients a more tangible picture of the portfolio being recommended and helps them to understand, for example, the cost aspect. The client-specific reports are very well received by clients.
Susan also uses FE Analytics’ custom table and ratio tables, where she builds custom tables to create favourite fund lists and a set of ratio tables to further analyse the funds, as an important part of her due diligence, picking out one or two key points to show clients.
One ratio she finds particularly useful is the downside, which shows whether a given fund has outperformed a given market benchmark during periods of market strength and weakness, and if so, by how much. In other words, it reveals the best and worst scenarios for a fund over a certain time period, showing the percentage movement in value from the highest position to lowest position. This is an indication of volatility.
“Ratios help me to show the client how the fund has performed in different market conditions so we have a better understanding of its potential risk. This helps clients feel more confident,” says Susan.
Reviewing existing client portfolios
As the client base is building, Susan is beginning to use FE Analytics more frequently for client reviews.
“My back office is Intelligent Office and this has a link through to FE and portfolio analyser. I love portfolio analyser. I find it really useful to be able to construct the client’s portfolio, link it to the model portfolio, then rebalance on a review. As time goes on, you can start taking snapshots of performance. You start to build up a really good picture and this is really powerful at review meetings and justifies the on-going service fee,” she says. “I wouldn’t be without FE. I think it is really good at analysing where you’ve been and forecasting where you want to go.”
FE Investment Forecaster
Susan finds the FE Investment Forecaster very useful too in helping her to understand and convey to clients the likely return of proposed portfolios over a number of different time horizons.
“Stochastic modelling helps me to analyse all of the different situations and scenarios and provide a range of likelihoods of achieving certain targets in the future. Put simply, it allows me to say to clients ‘If everything was going well – this is the highest return you could expect; and if everything was going badly – this is the worst case scenario’.”
It is one more tool in the armoury to give clients confidence in what Susan is doing on their behalf. “It gives me confidence too,” she adds.
The ability to justify her proposition to clients through the data, charts and wealth of background detail available through FE Analytics is also helpful from a compliance perspective. If there ever was a complaint, Susan has all the information she needs to show the audit trail of what she was recommending for the client and why.
Quality of service
Susan is happy with the breadth and depth of data provided by FE: “I’ve never had any issues; I’ve always been able to find the funds I need and there is a huge range of indices”.
She has found FE people to be “really good” too: “They understand what I need and advise me how to get the most out of FE Analytics for my clients. They help me build my knowledge.”
She also appreciates the fact that FE Analytics is web-based and frequently loads it on to her iPad when with clients to use the interactive performance charts – it demonstrates the value of her new proposition.
“If I had to cut back on software – FE Analytics would be the one thing I wouldn’t give up. I can’t get what it gives me anywhere else. I’d recommend it to anybody; it’s a really important part of the advice proposition and helps with the audit trail,” she concludes.