ADVISER MATTERS
Over recent years , we ’ ve seen a growing trend for advisers to outsource certain elements of their services , and this looks likely to only increase . I believe this can be attributed to a few issues :
1 The need for advisers to hold specific qualifications and , although the qualifications and requirements themselves may change over time , the impact of taking them does not . If advisers want , for example , to do pension transfers , or LTC , they need to hold specific qualifications . This is a large undertaking to both attain and maintain , and may often be for business that is not ‘ the norm ’. For these reasons , many decide not to go down the route of taking these additional qualifications and outsourcing is an obvious alternative .
2 Risk vs reward – some advisers who hold the necessary qualifications may still choose not to operate in certain areas . This could be simply because it ’ s not core to their operating model , that they don ’ t have the time and resource to devote to this area , or simply choose not to advise ; whatever the reason , outsourcing is there for them .
3 Another reason outsourcing is an option is down to the economics of the advice for both adviser and client . In recent years , for obvious reasons , we ’ ve also seen people reassess the way they value their time , and the time of their clients . Advisers are streamlining their business models and adding additional efficiencies wherever possible , and carefully considering if delivering certain , specialist elements , is where the value of their services truly lies for the client .
Whatever the main driver , it ’ s clear to see why outsourcing is a viable option . What ’ s more , with good due diligence processes , and a non-compete agreement ( where clients are passed back to the adviser once the business is concluded ) and potential remuneration share , it can make good business sense to the adviser , and ensures that clients continue to receive advice holistically for their financial needs .
What are the pros and cons of outsourcing ? The two biggest perceived cons of outsourcing – i . e . the threat of a client being ‘ stolen ’ by an alternative provider , or inadvertently exposing a client to financial harm – are perfectly easy to avoid . A robust introducers ’ agreement , including a non-poaching clause , will ensure that your existing relationship will be protected from a legal perspective . From a common-sense viewpoint , a company that is reliant upon recommendations would suffer such bad reputational damage if it started to poach clients , that it wouldn ’ t remain in business for very long ! Rather than weakening your relationship with your clients , I believe that outsourcing can only strengthen it . You will remain the conduit through which all your clients ’ needs are addressed , regardless of whether they fall into business areas in which you yourself have elected not to advise . When it comes to ascertaining the risk of introducing clients to outsourced suppliers , then check , check and check again ! Of course , undertake the due diligence checks that are required , but I ’ d suggest that you dig a little deeper ; ask to speak to previous clients and other advisers who have worked with the supplier , ask them to take you through their processes and make sure you have a full understanding of how the service provider will work with your client . If you still don ’ t feel sure that your client will be in good hands , then don ’ t make the recommendation . Your relationship with your client is one of trust , and you need to ensure that nothing is done to damage this bond , or the client ’ s financial situation . Of course , when you work with one of our SimplyRefer partners , this due diligence checking has already been carried out on your behalf by SimplyBiz , hopefully removing some of your reservations . Part of our SimplyRefer offering , our Pension Transfer Bureau offers an outsourcing solution to advisers who are either unable to , or choose not to , operate in the defined benefits transfer market , but still want to meet the needs of their clients in this area . You can find out more about the Pension Transfer Bureau , and the other SimplyRefer partners , in the ‘ Your Proposition ’ area of the site . We ’ ve asked one of our Bureau partners , Origen Financial Services , to share a case study of a client with whom they ’ ve worked recently .
# 05 | SUMMER 2022 | 17