Getting the file ready, eighteen months out

The order in which to bring client files up to date in the eighteen months before a sale.

8 min read · Guide for advisers

Buyers of advice firms apply a heavy discount where a large share of the clients have no recent documented review. By the time a sale process starts, it is too late to fix.

1

Measuring the gap in month one

Count how many households have a documented review inside twelve months, inside twenty-four, and longer than that. Count the recurring income attached to each group as well as the number of clients, because the two can differ sharply.

The unreviewed group often contains many households and a small share of the income.

2

Deciding the service for each group in months one to three

There are four options for a client who has not been reviewed in two years:

  • Re-engage them. This suits clients who are worth serving and with whom you have lost touch.
  • Move them to a service that matches what they pay. If the ongoing fee buys an annual review and they do not want one, change either the fee or the service.
  • Hand them on. Pass them to a colleague, to another firm, or to an adviser whose model fits a smaller household.
  • Stop charging. This is sometimes the right answer.

Leaving them paying an ongoing fee for a service nobody delivers is a fair-value problem under Consumer Duty, and a diligence finding in a sale.

3

Contacting every household in months three to twelve

Somebody has to make contact, update the fact-find, record the objectives, note the vulnerability markers and book the review. Only the review itself needs an adviser, so most of this can be done by somebody other than the principal.

That is why the Securo programme puts trainee advisers into the middle stage: they reconnect and update the file, and the advice stays with you.

4

Four gaps due diligence looks for

  1. Unsigned service agreements. Every ongoing fee needs a document the client has seen, setting out what it buys and what it costs in pounds.
  2. Suitability that only makes sense if you explain it. A file reviewer cannot ask you. If the reasoning is not on the file, it is not evidenced.
  3. Data in three places. Client data is often split between a back-office system, a spreadsheet and your memory, and what is only in your memory does not transfer.
  4. Historic advice you would not give today. For example, pension transfers, unregulated holdings and concentrated positions. Find them before a buyer does.
5

Finishing open work in the last six months

If a sale process is coming, use the final six months to bring the data into one place, bring file notes up to date and clean the client list. New initiatives in the last quarter before diligence create questions.

6

Tests of a file in good order

Another adviser could pick up any client relationship from the file alone. Every client paying you is getting what they pay for. You could give the date of the last documented review for any client.

Our readiness check covers the same three tests in twelve questions.

Related reading

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What due diligence looks at

The documents and records a buyer asks for, and how to have them ready before the request arrives.

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Consumer Duty and the client you have not reviewed

Under Consumer Duty, a firm has to show what each client’s ongoing fee pays for.

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Telling your clients you are stepping back

When to tell clients, what to say, and how the timing affects whether they stay.

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Talk to Steven Bates about Securo

Steven Bates, Director of Advisory at Equity & General, takes the first call with every adviser. Ring him on 020 8396 0486 or send a short note about your firm.

Send a note to Steven 020 8396 0486