Surprising ways outsourced review letters made one client more profitable

This month’s case study centres on the lack of clarity provided by the FCA on what should be included in review letters, and how that can impact financial planning companies. Because of this, the compliance officer for one of our clients insisted the aggregated costs of investments had to be included in review letters.

As MiFID II is a complicated document, they are not the only compliance officer to misunderstand what’s needed and they certainly won’t be the last.

Because of the misunderstanding, the client had recruited two researchers to deal with the increased workload created by producing aggregated costs. Sometimes the research took several days as investments went back decades, creating major headaches for the client and even impeding their financial success.

During one meeting with our client, we explained that these aggregated costs were not typically needed. In addition, we produce review letters for several large advice companies across the UK and work with many other clients to help them understand what is needed to meet regulatory standards.

The costs

Read on to discover five ways we helped eliminate the stress associated with producing the letters, improved efficiency and, ultimately, the profitability of the business.

  1. We confirmed to the client what the FCA wanted

As this is an area we are familiar with as paraplanners, the first thing we did was to confirm the FCA’s requirements regarding review letters. Breaking down every cost and aggregating the charges is not what the FCA typically wants under MiFID II, something we were able to demonstrate using our experience and understanding of the regulations.

A key rule is that as each provider sends the client an annual statement that satisfies MiFID II, the requirement for the financial planner to do this is usually removed. Explaining this eliminated the stress and worry the client was feeling around review letters.

  1. We reduced the cost of producing a review letter

As we provided the client with a selection of suitable templates, they no longer needed to dedicate staff to research or the production of overly complicated review letters. This saved time and money, meaning outsourcing has reduced costs for the client.

Another issue was that the client had fallen behind with other paraplanning cases because of the time spent researching for review letters. This meant getting recommendations ready for presentation meetings was taking longer than it should, creating a potential cash flow issue.

Now the letters are outsourced, the client is able to write business in a much timelier fashion.

  1. Review letters are now easier to understand

The FCA wants financial planners to provide review letters that are clear and easy for investors to understand. That said, a lack of clarity by the authority itself has resulted in compliance officers insisting on overly complicated letters to meet strict regulations.

Our templates are clear and easy for clients to understand so that they meet the FCA’s underlying goal. Instead of convoluted letters, ours are typically two to three pages, something our clients tell us investors like.

This not only ensures your clients remain happy, but it also shields your company from the FCA claiming your review letters are difficult to understand.

  1. Letters are more accurate

When the client had their own researchers, they were trying to use information from previous statements that used different time periods. As a result, aggregated costs included in the review letters were estimates, which would not protect against a client complaint or FCA investigation.

This is no longer an issue for the client, as the review letters we produce provide all the necessary information based on facts that can be backed up, providing peace of mind.

  1. Working with us makes financial sense

As we produce review letters daily, we know our way around them and can write them in a fraction of the time of the company’s adviser. Because of this, the cost of producing review letters is very competitive – especially when compared to the man-hours that were being dedicated to their production.

Another reason it makes financial sense for the client is that they have more time to concentrate on ensuring existing clients are happy and spend time generating new business.


Get in touch

If you would like to discuss how your business could benefit from outsourcing its review letters, please click here to contact us, or call on 01472 728 030.