The Model Office Blog

This is our 3^rd blog across Model Office’s (MO’s) 5 keys and we now focus on your service proposition that MO classes as ‘Your Promise’ that you are making to meet your on-going clients needs.

MO’s keys act as firm foundations so you can map and self-audit your journey as a professional practice, to ensure you not only meet the regulatory rules: TCF, KYC, Suitability, MiFIDII, GDPR, SMCR but also benchmark against the FCA papers and good outcomes they covet and also track performance against your peers. In essence the Your Promise key ensures your services meet regulatory and client needs on-going needs.

Your Promise tests for your performance against 12 business functions:

1. Centralised Investment Proposition-CIP: MO tests for how you have applied research and due diligence to your CIP, do you have a culture for challenging the status quo across the current platforms, tax wrappers, fund management services your firm may employ? MO provides resources for you to refer to and improve your scores, such as TR16/1
2. Client Risk Profiling: MO will focus on your Attitude to Risk (ATR) processes for ensuring you gain client informed consent across the risk required and risk tolerance to match client needs, goals and objectives. Allied to this MO tests for Capacity for Loss (CFL) required by COBS 9.2.1 and 9.2.2R. MO will provide a direct link to Ex FCA technical specialist Rory Percival’s paper on risk profiling tools for further context
3. Charging Plan: MO will assess and provide guidance for your adviser charging strategy to ensure it is aligned to client needs and the perceived value they gain from your services, plus ensure MiFIDII’s disclosure requirements are catered for and the FCA’s charging service disclosure requirements are met.
4. Research Tools: Here MO will look for tools that supply suitable information across the services offered and do they provide information that protects the client and the firm from inertia along with providing evidence based research and due diligence to improve the service proposition and CIP performance
5. Cash flow Modelling: As this technology becomes more popular, MO will test for the deterministic or stochastic position you are taking and ensuring you are projecting not predicting
6. Data Flows: The GDPR is a game changer for client consent and access to data, MO will ensure your data is clean, easily accessible, disclaimers are used and client opt-in/out is correctly positioned within the service proposition.
7. Technology: As firms begin to streamline services, if Auto-advice is applied (for example) firms need to ensure the algorithms used around portfolio selection and ATR/CFL are all aligned to the FCA suitability requirements. MO will test for this and provide steers and strategies around governance and systems and controls
8. Financial Planning Process: A large area of focus for the industry and MO when it comes to suitability, MO tests how standardised your process (es) are and how well TCF/COBS 5.2 KYC rules are met. MO also will focus on any specialised services you may offer such as pension transfers, structured products, long-term care, execution only and ensure they all are robust and meet the rules
9. Recommendation: Fair clear and not misleading is MO’s mantra here, ensuring The FCA’s Suitability and MiFIDII disclosure rules are met and you are providing the level of service you committed to in your initial disclosure document(s) plus your suitability reporting meets COBS 9.4
10. Monitoring and Analysis: Data analysis and file reviews play an important role here and MO will ensure you are using strategies to assess and improve your service performance as per TR14/21
11. Reporting: As with file reviews, reporting needs to be clear, simplified, focused on suitable advice, so areas such as MiFIDII’s 10% drop rule and ensuring you have a system in place to ensure clients can assess if services have met their expectations
12. Reviews: MO will test your review proposition and ensure annual reviews are offered to all clients and how you are tailoring reviews for client segments

MO's Your Promise key encourages your firm to take a strategic approach to your service proposition and the regulatory and client on-going needs.

Next week we cover Key 3: Your Systems. 

Please click the below icon link to MO's platform and learn more about MO today..