The Future of Financial Advice (FoFA) reforms present financial planners with a number of issues. While practices will face more work on the regulatory and compliance front, those firms with good client engagement will have an easier time with FoFA for a number of reasons.
These five questions – the ‘FoFA fitness index’ – can help you gauge client engagement and assess how fit your firm is for FoFA:
- How engaged are your active and new clients?
- Do these clients know what they pay?
- Do they value the advice and service they receive?
- Do these clients refer you to their valued relationships?
- For new investment clients, will they opt-in to you every two years
The FoFA fitness index should get you thinking about a number of important issues which are critical to improving the value of your business.
Firstly, are you engaging clients sufficiently well? This is important for any potential acquirer. Would they want to buy a business that has good client contacts and relationships, or do they just want to buy a business that is just a list, with no client relationships or contacts?
It is important to keep clients well engaged, especially if times are tough and markets are volatile. Good client engagement is something you can control in tough times and that can benefit your business, so keep in front of your clients and keep them engaged because ultimately what you’re selling is a client relationship business.
Ask yourself if you see your clients regularly enough and provide them with regular contact. Having a regular review process for your clients can assist with this – and help them see the value in what you do and make it easier for them to refer you to other people.
A number of requirements under FoFA are designed to address poor client engagement. So having good engagement will not only make life easier under FoFA – but ultimately improve the value and saleability of your practice.
