Staying in touch is valuable advice

By STEPHEN WOMACK
Updated:

 

Like life, our finances do not stand still. Yet many of us still fail to view financial planning as a continuous process. We make an effort to find the right adviser and carefully weigh up suggestions on spending and saving. Decisions are made, forms are completed and cheques are written.

Then we put the paperwork in a drawer and forget it.

The right approach is to treat the first meeting with a financial adviser as the start of a long relationship. Regular contact will help ensure that customers' financial goals are achieved.

'Our research says the biggest cause of problems between advisers and clients is lack of contact,' says Ann-Marie Martyn, chief executive officer of IFA Promotion, the association that puts the public in touch with local independent advisers.

'Certainly an adviser who sends you only a Christmas card isn't doing enough,' she says.

Independent financial advisers who are able to recommend products from many different providers can offer the widest service.

The majority of IFAs will advise on savings and investments, pensions, life and health insurance and mortgages. Many even help find the best current accounts and credit cards.

Advisers who are tied to one company can sell only the products of that firm. They are unlikely to be able to handle the full range of financial needs themselves, though some forge links with other specialists to bridge the gaps.

The best advisers have established routines for keeping in touch with clients. They will suggest annual meetings to review investments, send out newsletters on topical financial issues and may even arrange seminars.

But staying in touch is not a one-way process. Customers must also do their bit. 'The adviser does not have a crystal ball, so they need to be told about the important events in your life,' says Martyn. 'They need to know when you have a pay rise, or change jobs, and when there is a birth, marriage or death in the household.'

It is not that advisers are nosy. Or even that they scent a sales opportunity from lifestyle changes, though some new business may arise.

Advisers need to know because the plans customers have for their financial future may have to be modified to take account of changed circumstances. At worst, these plans could be derailed entirely.

SIMON Welch, an independent financial adviser with Maddison Monetary Management in Nottingham, uses the example of someone changing jobs.

'A new employer may offer a different package of benefits,' he says. 'There may be a pension, accident and sickness insurance and life insurance where there was nothing before.

'Alternatively, someone may lose vital benefits. Either way, it makes sense to talk to an adviser to make sure you have the right protection but are not wasting money on duplicate insurance.'

It may even be prudent to check with an adviser before accepting a new job. What looks like a pay rise could be a pay cut in disguise if the company's benefits package is not as generous.

Marriage, the birth of a baby or the death of a relative may have an even bigger impact. They may change tax liabilities, affect inheritance or create a need for life and health insurance.

There are other reasons to stay in touch with an adviser.

'Keeping the relationship healthy allows you to meet more ambitious goals over a number of years,' says Martyn. 'Few people have enough surplus cash to enter lots of new financial commitments in one go.'

Instead, a good adviser will work with a client over a period of time, tackling issues as they arise. As time goes by there should be less to do and meetings become progress reports to monitor the current financial situation.

Vivienne Starkey is an independent financial adviser with Haddock Porter Williams in London. 'When first dealing with a new client, a few meetings are usually needed to get things under control,' she says. 'We then settle down to a more regular routine. I suggest that meeting once a year is right for most clients, though some want more frequent contact and some want less.'

As part of her annual review, Starkey collates up-to-date valuations on clients' savings, investments and pensions, and details of their insurance contracts. All of these go into one folder. 'They can then see at a glance where we have got to,' she says.

This kind of regular review is especially useful when planning for long-term goals such as retirement.

Those who see a forecast of their pension each year are more likely to retire in comfort than those who buy a pension and then ignore it.

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