This is the first post in a series sharing some of the great discussions held at our December Investment Forum featuring panelists Ray Adams of CashCalc, Jamie Sexton of True Potential, and Alan Easter of FTRC. The session focused on how firms are using virtual fact finds and getting clients engaged in the process.

We decided to do a digital fact-find because that was a main problem slowing us down. Around 2,000 members of the public do their own fact-find every month, which is around 1.25 billion in assets. If the advisers get the facts first, they can discuss more important things in the meeting.

Ray Adams:

Well, you won’t be surprised to learn that I’m massively in favour of remote fact-finding. At CashCalc, we decided to do a digital fact-find several years ago, maybe four years ago now. Mainly because I also own an IFA business, and I saw it as one of the main problems which slows us down in our business. So in that sitting with a client for two to two and a half hours type writing into a paper based fact-find, and then typing it back up when you get into the office is bordering on madness.

So we introduced it several years ago, and just to give you some stats now, on average, every month we have between two and two and a half thousand members of the public do their own fact-find straight into CashCalc, and it’s all branded up with the adviser. Now to give you a little bit more on numbers there, the average household for pension investment and cash in the bank is 506,000. So we’ve got between one and one and a quarter BILLION of assets being literally typed into CashCalc by the client themselves every month.

So to me, that’s a huge benefit because the hard facts are then given to the adviser ahead of the meeting, whether that meeting is then held face-to-face or on Zoom. So at the meeting, instead of being two and a half hours of rapport building and information gathering, and then finding out what the clients want, you can get straight into discussing what the client wants, because we already know the hard facts about roughly how much their pension is, or whether they’ve got a mortgage and we can then discuss with the client exactly what they want to do with their money. So I’m massively in favour of it.

A big part of the MiFID changes with annual reviews is ensuring that the product is still suitable for the client and checking if any changes have occurred. Pre-meeting digital fact finds save everyone time.

Jamie Sexton:

We’re very pro getting clients to log in and really understand their finances. And fact finding is a big part of that. We have the access for clients to log in and fill out the fact- find, and we’ve done over about 6,000 electronic fact finds over the last 11 months, but actually a big part of the MiFID changes with doing annual suitability reviews is ensuring client’s circumstances are still suitable for the product. And that is about making sure have any changes happened? So we’ve done over 70,000 of them, where clients are logging in assessing the information we have on file and updating that. And if there’s any changes they can flag them the adviser can adopt it.

For me with fact-find, the hard facts are important to get pre-meeting, it just makes life easier. When you start to discuss with the client, I’m still an avid believer that you should use the technology to get that information, but on the soft back-side of things, when you start needing to talk to clients about things such as understanding of risk, I do think in that area, yes, you can fill out risk questionnaires, but there’s sort of personal risks that you get when you talk to clients.

And I think that is a conversation that will be involved in the meeting, but by collecting all that fact information prior really can save a significant amount of time. And I remember, and you probably remember this as well, the all positive solutions days where advisers used to go out with a tablet before iPads were even a thing. And, and now it’s took that step further where clients love it and just do it themselves.

Fact-finding isn’t in the conduct of business, and rarely covers the KYC process fully. In a business you need to make sure there’s only one record of truths, and an alternative process if the client doesn’t want them to do it themselves.

Alan Easter:

I think for me, there’s a step back, which is a challenge, since fact-finding as an exercise isn’t something that’s in COBs. If people want to look at it later, it’s COBs 5.2.5 which says that the firm must take reasonable steps to ensure that they are in possession of the personal information about that customer relevant to the services that the firm has agreed to provide.

So whilst a fact-find may be the document that you use or may be the document that you send. My challenge is that the fact find very rarely covers the KYC process fully and a lot of the information that it catches is probably necessary, but not important to the planning process. It’s more about the soft facts for me that need to be captured.

I think the two challenges that I’d lay down is that if people are using different systems to capture this information than they need to make sure that there’s a high level of integration. You only want in your business one record of truth; you don’t want multiple records of truths that you’re trying to refer to constantly. So making sure that there’s that two-way integration process between your practice management system and your cashflow system is critical.

We’ve always been a remote business, we set up clients with a portal and they can do their fact find and ask us questions and we do video meetings. People are computer literate at all ages and are happy to do it themselves.

Jane Hodges:

When we started the business, we were always going to be remote. We were never going to physically see a client, so we were never going to be doing any of these things. And so we’ve been doing for three years. We onboard hundreds of clients every single year, and we set them up on a client portal.

The first meeting is just all about the services we offer and a discussion about what they’re trying to achieve. And then we literally log them into the portal and let them do their fact finding once we have that, then we start to go backwards and forwards with questions on our portal account. Some of the information, sometimes we do that in meetings, video conferences, sometimes it’s just on the secure messaging, it all depends what the client wants to do and how comfortable they are.

I just can’t imagine how anyone was sitting in front of a client and wasting two hours of their life and the client’s life collecting information about where they live and what job they’ve got and what their salary is. Because seriously, people know this stuff, they can write it down themselves and people who were less computer literate, five or 10 years ago, that’s just gone, now I’ve got 75 year olds who are filling out client portals all on their own and putting all their fact find detail in. And I just think we’re in a different world now.

I wish nobody was catching up with us because now it’s starting to become a bit more normal. Whereas three years ago we were the only people doing this. But it is so much more efficient and effective and you just use your time in the right way.

There will always be things you need to ask questions about, but it gets the client engaged right away and it helps you identify what needs to be asked.

Ray Adams:

If I can jump straight in there, I think Jane hit the nail on the head really. So she said her clients are actually filling in fact finds, but then she quite often might need to do secure messages back and forth, or actually have Zoom meetings. So there’s always going to be things that you identified that need to be asked. So I think if I get the client to do the fact-finder ahead of the meeting, to me, it ticks off several boxes and this is probably my adviser hat on.

Now, typically a client would ring an adviser firm and say, “look, I’ve been recommended to use you, can make we an appointment”. And then we dive in, make an appointment and sit and do a face-to-face fact-find. But actually, if you get the clients to do the hard facts ahead of the meeting, you’ve now got them engaged. They’re completely engaged in the process. They’ve had to look at their finances a bit to grab and have a look at what their latest mortgage statement is.

So you’ve got an engaged client in the process who’s looked over that finances ahead of the meeting. You can look over the finances ahead of the meeting and able to clearly identify, “Oh, I need to ask more questions in this area”. So I don’t think it stops you asking those questions, Danny, I think it probably gives you more opportunity to identify them. Because you’ve got time to think about them ahead of the meeting.

The remote fact-find gives the adviser more time to go over the information and to see what’s missing. Expenditure is often wrong the first time, and requires some digging by the adviser.

Jamie Sexton:

I wrote down the same comment, which is exactly, we operate in a similar way to Jane, which is you get the information and then actually sometimes information leads to more questions. Where as an adviser, you have that instinct where they may have missed something or there’s an area that you wish to cover. And I think you’re right, it does give you more time, by them completing that information, and you going through that it does give you more time to understand it.

A classic one that we have and I’ve mentioned a few times, is how often expenditure is wrong on a fact-find on the first attempt. And it does sometimes take an adviser to dig in a little bit, to find out where they are actually spending the money because sometimes clients don’t realize it. And we’ll talk about that a little bit later on, but I think these are the key things that you can spot and have the time to do. It’s not a case of just filling out a fact-find and giving some advice. For the client that there’s definitely that adviser in the middle of which will pull information out.

The completion of a fact-find has become a discipline in firms but there are firms that find other ways to demonstrate that they know their customer without it.

Alan Easter:

It wouldn’t be appropriate to share the name of the firm, at this point, but it was just a firm that I’m quite close to that did have a visit. The team from the FCA asked why there weren’t any fact-finds on the files, and the firm said, “because I don’t need to complete them, I can demonstrate that I know my customer without the need for a fact find and all of the hard facts are recorded in the practice management system”.

And there was an encyclopedic record of all of the soft facts. So every email exchange was retained. Every telephone conversation was recorded. Every piece of post was scanned and logged and it was a pure demonstration that “we know our customer. We can demonstrate that we know our customer”, and we go back to that point about the relevant service that we are offering.

So I know the completion of a fact-find has become a discipline in firms, and I’m not suggesting that it shouldn’t be, what I am suggesting is that knowing your customer, isn’t the completion of a four page piece of paper.

The average return rate for fact-finds on CashCalc is 61%, but within our own firm its 93% because we explain to customers how it helps them and offer a lower fee because it saves our time.

Ray Adams:

The national average for return rate on CashCalc 61%. So if we’re doing two to two and a half thousand fact-finds a month, then we’re requesting three to three and a half thousand. Interestingly my IFA firm, which is about 50 meters from where I’m sat now, our return rate is 93%. And I think it’s because in my own firm, when we get referred a new client, the first conversation is, “Oh,” the client says, ” I book a meeting?” And my advisers then say, “well, in the olden days, we’d have booked a meeting. What we now do is we send you a secure link.

We send you a pin number to your mobile phone and there’s two factor authentication, and you spend 16 to 18 minutes doing the fact-find ahead of the meeting. Then when we get together, we don’t need to be there for two hours. We can be there for 45 minutes to an hour and discuss what’s really important to you”. And most clients say, “Oh, that’s great”. And I think my staff then say, “and an added benefit is we’ve just saved over an hour of my time. So our fees are now automatically cheaper”, and we get a 93% return rate.

So the challenge for me taking my IFA hat off now, putting my CashCalc cap so that I can get that message to our thousands of CashCalc users and say, if you have a similar conversation guides, you can get your conversion up to in the nineties, which I’m sure Jane, your conversion has got to be up to a hundred percent because you can’t go and see them, can you?

People know how our process is before they come and we’re still getting new users all the time but not everyone completes the portal.

Jane Hodges:

Yes I mean, everywhere that you can find us, it’s always made really clear how we work. So it’s not as if someone comes to us and thinks they’re going to have a face-to-face meeting with lots of paperwork. They know exactly how it’s going to work before they even get to us.

And we’re inundated with people coming through our website, you name it, we’re getting six or seven leads every single day it’s driving us nuts just trying to be polite to them to say no, but then when they start and they’re completing their own portal, nobody completes their portal, and then doesn’t carry on.

We’ve just launched a self-on-board option for CashCalc.

Ray Adams:

You’re probably not aware, but two weeks ago CashCalc launched the self on-board option. So now on your social media, you can put a button where the client doesn’t even have to make a phone call and say, “can I become a client of yours?” They can literally click on it, go straight to your portal, go straight to your disclosure documents and go straight to the fact-find.