Is Our Information About You Still Current?

It’s the same in our business. A client who hands over some capital and tells the portfolio manager “just don’t lose money” isn’t giving the “driver” much to go on. Fortunately, most clients are quite open about themselves and what they’re trying to accomplish by engaging a portfolio manager. For sure the manager wants to understand the client and their circumstances, to have a clear picture of the client’s financial objectives, and, importantly, not to miss a meaningful change in the client’s situation because “it didn’t come up” in the normal back-and-forth between manager and client. And it’s best for both if the information exchange is efficient, and there are no glaring gaps or misunderstandings.

Going back to the taxi example, when it comes to information exchange, Uber’s got it down pat. Through an app, Uber has all the relevant information: the passenger’s cellphone, email, credit card, and usual destinations (mine are “Home” and “Work”), to list the most obvious. There’s even a place for something called “trusted contacts” – people who are allowed to see my location in real-time when I’m in an Uber.

In our business, we’ve always sought to make the information exchange between client and Nexus efficient. But it’s hardly been “Uber-like”. However, as regulators are raising the bar, and now require us to confirm with clients at least annually that the client information we have on file remains accurate, we’ve had to come up with a more streamlined approach – one that’s not a burden on clients or on us. Unlike Uber, however, we can’t herd everyone onto a smartphone app. Our approach has to be more tailored than that.

To accomplish this, starting later this spring, Nexus will begin rolling out an “update questionnaire”. Each year, we’ll provide the client with the information they’ve told us previously – including such things as their expected pattern of portfolio contributions and withdrawals, their employment situation and income, summary information about non-Nexus financial accounts and assets, and their professional advisers and “trusted contacts”. The client can revise the things that have changed, and tick “No change” beside those that remain the same. However, there is no way to avoid the fact that the first time the questionnaire is completed it will take some time as clients help fill in some gaps in our records. In subsequent years, it should only take a few minutes.

Not everyone will get the same questions. A retired person would be justifiably irritated to be asked “When do you expect to retire?” Similarly, questions about changes in signing officers and decision-makers are important for a large charitable organization, but don’t really make sense to ask a married couple. While both spouses are welcome to complete separate questionnaires, in most households the “family CFO” will probably respond on behalf of the couple.

Much of the questionnaire will be familiar to clients who have had a financial plan prepared by Nexus. But someone who hasn’t looked at a financial advisor’s “know your client” form in the last 10 years will probably find that some questions have become a little more specific since then. Suffice it to say that we’re asking only questions that are required by regulation or which will yield information that we know from experience enables us to best serve clients.

We anticipate that most people will prefer to complete something like this on-line – on their computer or tablet. To quote Apple, we’ll “have an ‘app’ for that” (complete with the sensible data security features you might expect). No doubt some will prefer paper. There will probably also be situations where it works best if the Nexus partner jots down the answers while in conversation with the client.

Suffice it to say, we’ve thought carefully about how to make the information exchange as seamless and useful for clients and Nexus alike. With luck it will be nearly as convenient as Uber, but in a much nicer “vehicle”!