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Powwow Down South – highlights from the discussions

8 May 2017

Rob Kingsbury reports on discussions from the recent paraplanner mini-Powwow held in London.

[Powwows are held under Chatham House rules whereby the content may be reported but not who said what.]

When planning this first 2017 Powwow Down South, the three organisers – Alan Gow of Argonaut Paraplanning, Nathan Fryer of Plan Works and Dan Atkinson of EQ Investors – looked to introduce some fresh ideas.

They first lined up a presentation from the Powwow’s hosts, Seven Investment Management, on holistic risk profiling, including the impact for clients who are comfortable in taking more risk when looking to achieve their goals.

The floor was then opened up to a general discussion among all attendees on topics proposed prior to the event and then displayed and voted on that day.

[Pictured above (front to back), Kim Bendall, Dan Atkinson, Nathan Fryer and Richard Allum select from the topics suggested for discussion.] 

Tapered annual allowance

In the open debate, paraplanners were asked how they were tackling explaining the tapered annual allowance position to clients, particularly where a contribution could see the client’s allowance go down.

“It’s a real mess,” one attendee said, “ it’s one of those situations where the Chancellor has made a decision and HMRC and the Treasury have to sort it out.

All you can do is explain it as simply as you can, although you’re almost going in complete circles because everything you change has an affect elsewhere – sometimes you just have to make decision and stick to it.”

Another attendee said that while she had tried to try to explain tapering to clients “line by line” now, to keep it as simpler as possible for the client, “I go to the bottom line and say this is the current situation and it will be affected if any of your salary, your pension contributions, your benefits, bonus sacrifice and so on, change.”

Others in the room seconded this approach. “The client doesn’t really need to know every part of the process provided they understand the outcome – although you can put a more detailed account in the appendices if you like. It’s like having your car serviced, most of us don’t want to know what was done line by line in the service, we want to know that when we put the key in it’s going to go.”

Others said they tackled the issue by providing a simple explanation in the report and offering to provide further detail if the client wanted it.

Cashflow planning

One of the most popular areas voted on for discussion was tools used in cashflow planning.

Tools mentioned as used in cashflow preparation and presentation included Voyant, Prestwood Truth, Moneyscope, PlanLab, Cashcalc, Xtools, as well as Excel spreadsheets.

Voyant’s Adviser Go and 7IM’s consumer-focused tool were recommended for simpler presentations particularly via tablets, and requiring less input to work. As one delegate said: “I find advisers prefer to use Adviser Go in front of their clients because it is simpler and can be quickly adjusted.”

Simpler cashflow tools seemed to be used to present and to help bring clients on board, with more in-depth and detailed cashflow planning being part of the follow up work and charged for as a service, even if part of the ongoing percentage fee.

As part of a discussion around cashflow tools that paraplanners used and why, the question arose around whether cashflow should be used across all clients, as many firms have a two-tiered approach where they only offer cashflow to clients that have over a certain value of assets, i.e. those bringing in revenue above a set level.

This seemed counter intuitive it was suggested. “People with lower asset figures can often be the people who need it most, as it’s they who need to know if they are going to have enough to see them through retirement, whereas those with a lot of money are probably not going to run out before they die,” one attendee said.

Cashflow, it was suggested, was so inherent a part of good financial planning that it should be given across the board.

Higher value clients needed it for tax calculations and where they had more complex financial circumstances, as well as lower value clients for the reasons mentioned. Within the latter group could be younger people, in their 20s and 30s for example, who don’t have the wealth as yet, but who may well do in the future. By offering cashflow as part of the service to them this builds in value and is more likely to create greater loyalty in the client.

“If you can give the client a visual representation of the money they are paying into a pension and their household expenditure and mortgage and where they might be in years ahead, then it helps them buy into the fact that what you’re doing for them is not just transacting; it’s giving them a lot more. That way they can become a better client.”

Another example mentioned was the growing number of clients who wanted to help their children with deposits on their first homes. Here, cashflow can help greatly in visualising whether that is possible or not and how it might affect the client’s retirement plans.

A tip given was to set up a simple cashflow model which could be templated to be used with more than one client and also to set up the cashflow starting at the beginning of the tax year – which enables the tax calculations around income tax etc. to come out in the first few years.

Attendees suggested simple cashflow models can be set up for all clients and firms have to be looking at this in terms of the overall client relationship and what’s right for the client, beyond whether a product or service is going to be sold off the back of it in the short term.

One attendee added that he had been talking to compliance companies about which clients did and didn’t get a cashflow plan and those firms “were beginning to ask some tough questions from a TCF point of view”.

It was also noted that firms were using cashflow planning as a means to differentiate their business in their marketing literature and generate referrals.

“Clients don’t always see the value of it, particularly when its simple and they have lower value assets, but if it’s part of the annual review process and they can see the line moving and visualise how it’s affecting their future finances, that’s when a firm starts getting referrals.”

Summing up

Summing up this Powwow, Nathan Fryer said: “This is our fourth year of running the Powwow Down South and it was great to see so many people turn out for what we hope will be the first of two London-based events in 2017.

“We were delighted in particular to see so many new faces and the openness among the whole group in the sharing of their views knowledge and experiences, for the benefit of their peers.

“I think everyone today will have gone away having learned at least one new thing they can use in their role and the way they plan for clients.”

 

 

 

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