Introduction
Skybound Wealth Management Ltd (Skybound) is a financial advisory Firm which is registered with the Financial Conduct Authority (FCA) and has been providing advisory services to clients in the United Kingdom (UK) since 2002.
During this time the Firm has taken its responsibility to both its clients, and in meeting its regulatory obligations seriously, and has established systems, processes and policies to ensure that these obligations are fully met.
Skybound is a ‘non-independent’ advisory firm whose client base is predominantly made up of retail clients. As an advisory firm we do not hold client monies, nor do we manage any funds directly. As a financial advisory firm we engage with our clients on an advisory mandate basis and offer services to assist them in managing their financial planning and achieve their lifestyle financial planning goals and objectives.
We are able to offer our services on a wide range of financial products which are sourced from across the market and are recommended in accordance with our specific client needs and objectives.
All our products are subject to internal due diligence, and we work closely with our Providers to ensure that they offer good value for money and have a broad range of investment options. We also ensure that any product providers with whom we engage are fit and proper and their products are suitable and appropriate to our typical client base.
As part of a wider Group of companies, Skybound also works with our associated international advisory Firms assisting with UK repatriation clients and the management of their international policies on their move to the UK. This ensures continuation of service to the wider Group clients when they move and are no longer able to be managed by the international Firms.
However, it is important to note that repatriation clients may not hold policies or products which are ordinarily found in the UK. It is therefore our responsibility, as their advisory firm, to ensure that any international policies they bring to the UK are appropriately managed in accordance with the contractual terms of the products/policies they hold. This means that in some circumstances our services to our repatriation clients may be limited as we are unable to consider alternative UK options without this having an adverse effect on the client’s overall outcomes.
With the introduction of Consumer Duty Regulation, Skybound has taken the opportunity to review its systems, policies and processes in relation to the services it provides to clients to ensure that it remains focussed on achieving positive consumer outcome, whether they have been directly engaged by our UK Firm or have transferred their existing policies to us for ongoing advisor management as part of a repatriation process.
Skybound has also taken this opportunity to review the products it has available to recommend to its clients and our due diligence process to ensure that our service proposition and products are in line with our client base and target market.
Purpose and Strategy
The purpose of this policy is to review the services we offer to our clients, our systems and processes to set out, where necessary a clear strategy in how the Firm seeks to implement and evidence the requirements placed upon it by Consumer Duty regulation.
How we do this
As a Firm we have an advisory process which has been implemented in order to ensure a consistent level of service to our clients and a clear transparent understanding of what we do and how we do it. Our clients can expect to receive advice in accordance with this process irrespective of whether they are directly engaged clients or repatriation/referred clients to the firm.
Our process can be adapted to cater for the needs of the individual client and ensures that whilst we are focussed on the positive outcomes for our clients, we continue to meet our regulatory obligations in relation to the suitability and appropriateness of the advisory services we deliver.
These processes and expectations are understood and required of all individuals working within the Firm and is regularly communicated through Management meetings across the Firm and through internal training sessions.
As a Firm it is first important to identify the type of client with whom we are providing services to. We understand that our approach to clients’ needs to be tailored according to the specific needs and objectives of the client and this is identified from outset. Appendix A contains our client life stage segmentation which sets out what we would typically expect clients, at certain life stages, to require from a financial adviser/financial planning perspective.
As a Firm we remain focussed on ensuring a positive client experience and this starts from our website which we ensure is clear, concise and sets out exactly what services we are able to offer as a UK regulated financial advisory Firm.
Our website is set up so as to enable clients across all of the life stages to review and consider whether our Firm would be able to provide them with the assistance they require. It also allows prospective clients to approach the Firm to obtain information prior to engaging with us directly.
Our initial approach with clients is always to ensure that we fully understand our client needs, objectives and goals. This is achieved through comprehensive engagement with the client directly during which we obtain and record all necessary know your client information (KYC). This KYC process will also consider a client’s appetite for investment risk and capacity for loss. If fully obtained, then the Firm will be able to determine clearly what the clients’ objectives are and readily identify whether we will be able to assist the client.
As a Firm we will not engage with clients where the advice they require falls outside of the regulated permissions we hold.
It is also important that we identify whether our clients could be considered to be ‘vulnerable’ from the outset. To this end we ensure that our advisors, and those staff who may have direct contact with our clients, are provided with the necessary training and competence to be able to identify this from outset. This then ensures that any specific needs of the client can be catered for and managed accordingly.
Our Client Agreement, ‘What we Do and How we do it’ document, Consent and Privacy Notice set out how we engage with our clients in relation to the advisory services we provide.
These documents also clarify:-
- how we charge for our services;
- how we communicate with our clients (ie mediums of communication);
- how we manage our client data and marketing preferences;
- what our clients can expect from us as their financial advisory Firm;
- who our regulator is;
- our clients’ obligations as part of the relationship we have with them;
- rights of recourse should the need arise;
- point of contact information including telephone numbers, e-mail addresses and website links;
- Confirms our client categorisation for the purposes of the services we provide and the increased protection that may be offered as a result of this;
- Termination notice periods applicable to both parties.
We will always be open and transparent with our clients and, where we are unable to assist a client, we will make this clear from the outset.
As part of our advisory process, it is also important to establish our client’s appetite towards investment risk. As a Firm we do not engage with Providers or Products which could be considered as higher risk. Therefore we would not engage with or seek to advise any clients who are seeking to obtain advisory services in relation to these types of products as we would not be able to meet their expectations in this area.
Any advice or recommendations presented to our clients will be presented to them in our personal suitability report. As a Firm we are committed to ensuring that these reports are written in a clear and understandable format avoiding the use of jargon or complex references which could be misunderstood or misconstrued. Our reports are client specific and reflect individual needs and personal circumstances as identified from the outset of the relationship and will be transparent in terms of :-
- our understanding of the client’s objectives
- the advice and recommendations presented and how these meet the client’s specified objectives in accordance with their experience, knowledge and understanding
- fees and charges associated with the product recommended and how these will be applied to the product recommended.
- The Firms advisory fees in terms of both the initial advice and any ongoing fees should the client wish to retain our services after the initial advice period
We will always provide our clients with all relevant information to enable them to make an informed decision prior to them making any decision with regards to whether they should proceed with the recommendations set out to them.
As part of our advisory services, we will ensure that the client fully understands the products we are recommending and appreciate that much of our Providers product literature can be technical and
difficult to understand. Where possible we generally seek to confirm understanding of products and how they work in writing with our clients prior to them proceeding with any recommendations made.
It is our policy to allow clients time to review, consider and digest the information we provide them with and work at each individual client’s own pace. This may mean that some clients will receive/require more direct interaction with an adviser and a longer reflection period to others who have a better knowledge and understanding of financial products.
Whilst we endeavour to make our services available to all we recognise that, as a small Firm, there may be occasions where we are unable to facilitate specific needs of individuals. Where possible we always seek to try to accommodate our clients’ specific requirements, but where this is not possible then we will explain the position to the individuals concerned.
Products and Services Outcomes
As a Firm we recognise that our clients are only able to achieve positive consumer outcomes if the products we recommend to them, or have available to recommend, are fit for purpose.
Our products typically fall within two categories. Those which are UK specific, and those with whom we engage in order to manage and assist clients who are arriving in the UK with international products and policies.
Many of the repatriation clients are referred to Skybound from our associated international financial advisory firms. This means that they usually arrive in the UK with specific financial products/investments, some of which would not ordinarily available in the UK. To be able to assist with a continuation of service for the client, Skybound will therefore often have to engage with international providers in order to provide advisory services to the client. Such products would not be recommended to any clients directly by the Firm.
Repatriation clients are not specifically targeted by the firm. Whilst they may fall within the remit of the firm’s client segmentation some of the more typical criteria associated with individuals falling within those segmentations may not be appropriate for consideration due to these types of clients very specific and particular circumstances and needs.
Therefore, as a firm, we have sought to distinguish the services we provide to our Repatriation clients so that our services and fees can be more specifically tailored to the individual needs and requirements of repatriating individuals and can also factor in the additional resources required of the Firm when dealing with International Providers.
This means that repatriation clients are unlikely to be considered in accordance with the Firms standard client categorisation and will have a unique categorisation for the purposes of the advice provided.
Irrespective of the above, the Firm has a specific product governance and due diligence process and policy which sets out how we select and approve providers and their products. It is not possible for anyone within the Firm to establish terms of business with a Provider without following this process.
Target Market Assessment and Client Segmentation
To meet the requirements of Consumer Duty it is necessary for Skybound to demonstrate a clear link between our target market and the services we offer.
With this in mind we have undertaken both a client segmentation, and life stage segmentation, in order to identify those types of clients with whom we would typically engage, and to identify those needs which would typically be associated with those client segments. Our client and life stage segmentation considerations are contained within Appendix A, B and C. From this we can then ensure that our client proposition and services are tailored to meet the specific needs of the client.
Our typical client base is made up of individuals falling between our ‘Young Family’ and ‘Empty Nester’ life stages.
As a firm Skybound may offer more than one service proposition to our clients. This may depend on the basis of the client’s engagement. For example, those clients who engage with us following repatriation may engage with us on an on-going advisory basis only with specific reference to their international policy. Whilst other clients may engage with us to provide complete lifestyle financial planning advice.
It is important to note that there are occasions whereby Skybound may not be able to assist with clients who are referenced within the client segmentation matrix as to do so could potentially cause harm to the client.
For example, repatriation clients who have small contractual regular savings plans who have no intention of continuing to contribute to their policies whilst in the UK, or where individuals have only a small investment amount. In such cases it may not be cost effective for clients to pay our advice fee.
Such clients will be identified at outset and Skybound will not seek to engage with them for the purposes of providing advisory services.
Those clients we would seek to identify as unsuitable and to whom we would not offer our services to are set out below irrespective of whether they fall within the categories included in Appendix A, B, and C:-
- Re-patriation clients who have small contractual regular savings policies and who are unlikely to continue to contribute to the policies whilst in the UK.
- Non-UK resident clients.
- Clients with only small amounts available to invest or who are likely to need access to their investment before the benefits of the investment are likely to occur e.g. before policies mature.
- Individuals where there is no readily identifiable and confirmed source of wealth.
Skybound Proposition
Skybound Wealth Management Ltd has engaged with a number of Providers in order that our advisers may have a wide range of products to choose from depending on our clients’ specific needs and objectives.
As a Firm we offer a range of financial advisory services which are dependent on our clients’ needs and also their life stage as per Appendix A.
Some of the services we offer to our clients are detailed below: -
- Lifestyle holistic financial planning
- Management and advice in relation to repatriation clients’ international policies and products
- Pension and retirement planning (occasionally where this involves DB pension transfers then third party FCA regulated pension transfer specialists are engaged to provide the specialist advice required)
- Savings – including ISA’s and GIA
- Mortgages – including mortgage protection (where required)
- Inheritance tax planning
As an advisory Firm we do not hold client money directly. Therefore, when advising our clients assessing and reviewing the suitability of any given product is determined by the adviser based on their understanding of the clients’ specific goals, needs and objectives.
Some factors for consideration when determining the suitability of the products include:
- Detailed understanding of the client’s personal circumstances and objectives
- Client knowledge and understanding of financial products and investments
- Appetite for risk and capacity for loss
- Reason for, and term of the investment ie retirement planning, accumulating savings for a specific purposes such as property purchase
- Costs associated with the product – including dealing fees, establishment charges etc.
- Investment options within the product
- Whether the product is suitable due to the client’s individual circumstances – such as for vulnerable clients.
Potentially suitable products are then selected from a range of available products with whom the Firm has established the necessary distribution arrangements.
All distribution arrangements are subject to due diligence prior to any arrangements being finalised as outlined above and contained within our product governance and due diligence policy.
Vulnerable Client Considerations
As a firm we take our responsibility for identifying and managing our responsibilities in relation to the services we provide to our clients where it could be considered that the client is (or could be perceived to be) vulnerable. Our internal policy in relation to vulnerable clients sets out the Firms approach to managing vulnerable clients and we ensure that our staff are aware of their obligations in this respect through training which is conducted within the Firm.
We are aware that a client’s vulnerability can take many forms and will seek to take appropriate actions to ensure that any such client is not disadvantaged. As a small advisory Firm, we do not have the necessary resource to have readily available materials, such as internal forms etc. in braille format, or multiple languages. However, as part of a wider Group we do have access to a wider
resource to assist with making such documents and information available should this be required. We also suggest that on identifying a client who may be considered vulnerable, the client is accompanied during any meetings and clients are given time to reflect over information they have been provided before they make any decisions.
As many of the Providers we work with are part of larger financial institutions (eg Natwest) many of them do have their product literature available in alternative mediums to their standard literature. Where this is required, we can factor this into our advice/product recommendation process and explore options available.
Fair Value Assessment
In accordance with our obligations in relation to Consumer Duty it is important that we are able to demonstrate that the services we offer and provide to our clients are value for money. This means that it is necessary for us to conduct a value assessment of our fees and services to demonstrate this.
Skybound currently engages with clients on a fee arrangement basis which is calculated as a % (up to a maximum of 3%). This fee applies to the original advice provided. There is no fixed tiering for the percentage range charged for a particular client, and the amount can be at the discretion of the adviser depending on the nature of the investment and, ultimately, the assets under management.
Should the client wish to retain our services then as a Firm we charge an ongoing advisory fee of 1%. However, again this is not fixed and may vary according to client circumstances and AUM.
On the basis of the above the Firm has identified the need to carry out a full fair value assessment of the services it provides, and the charges it applies for these services, in order that it is able to demonstrate fair value to all clients.
Having conducted a review of our client base, and the charges paid by those clients for services provided, we have recognised that in order to meet the positive outcomes requirements for clients and provide a fair value service we, as a Firm must reconsider the way in which we charge our clients.
In the first instance we have sought to separate our two distinct client bases. These have been identified as UK resident clients (clients who are resident in the UK and are typically ordinarily resident UK citizens) and Repat clients (clients who have worked internationally and are repatriating to the UK – these may not always be UK citizens).
We have sought to define the two client bases due to the more specific needs and requirements of those clients who are repatriating to the UK as they will not typically fall within the client lifestyle segmentation we have considered and will generally have received advice from an International financial advisory firm and have International Investment products.
UK Resident Clients Fair Value Assessment
As outlined above as a Firm we have found it necessary to reconsider the way in which we charge our clients for the services we provide as our current structure does not adequately address the different services our clients may require, and attribute charges fairly as it is based on a % of the client’s assets.
Going forward we have set out three service level propositions which may, in turn, be linked to the specific client’s life stage segmentation (though this will not always be the case) and client segmentation.
Our client service propositions, the charges associated with these, and the basis of the minimum charges applicable have been set out in Appendix E. This document also then sets out how the Firm will then seek to charge any ongoing advisory fees to its clients in accordance with the services it provides as requested.
In order to accommodate the change in approach to how we charge and the fees we charge to clients the Firm has sought to make changes to the Client Agreement and the ‘What we do and How we charge’ document which is provided to clients at the start of any relationship.
Within this our fees and service level options will be set out in a clear and concise manner so as to ensure that the client is able to easily understand what services they will receive for the ongoing fees and/or upfront charges being paid and these will be relative to the services being provided to them.
Repat Clients Fair Value Assessment
Due to the nature of these types of clients, their circumstances are often more complex due to the type of investment products that they hold and also the impact of UK financial and taxation regulations on the investments they are bringing into the UK.
Currently, each Repat client is assessed individually, and a standard ongoing advisory charge is applied at 1% (subject to a minimum of £750) irrespective of the type of policy the client holds.
With the introduction of Consumer Duty regulation, it has been necessary for the Firm to evaluate the way in which we currently charge our Repat client and look to ensure that the charges we apply are appropriate to the services provided, the clients circumstances and the expected consumer outcomes.
Many of the products which clients hold when they return to the UK are not products which would be available to clients within the UK and many of investments may not be appropriate for the client now that they are resident in the UK. Therefore, any advice provided to these clients must be managed carefully and as such the standard segmentations which can be considered for all other UK resident clients will not be appropriate for these clients. We have therefore created a specific Repat client segmentation which is in Appendix C.
Our client service proposition for Repat clients is set out in Appendix D.
As with the UK resident clients Repat clients will only be required to select the service proposition that is appropriate to their specific needs.
Mortgage Clients
Skybound does offer mortgage advice to clients who are both resident in the UK and also has relationships with Providers who are able to offer mortgage assistance to those clients who are non-resident in the UK.
Our mortgage proposition is a relatively small part of our overall business and is generally reactive to client requests for assistance in this area rather than the Firm pro-actively seeking clients at the current time.
However, as part of our Consumer Duty considerations it has been necessary for us to evaluate our offering and our fees and charges for those clients who are provided with our mortgage advisory services.
Currently, the Firm has three base types of mortgage clients:-
- Non-UK Resident – Buy-to-let mortgages
- UK Resident – Buy to Let
- UK Resident – Main residence mortgages/re-mortgages
Our mortgage client segmentation is set out in Appendix F.
Based on the three client segmentations the Firm has then sought to review the service level propositions it currently offers to clients in relation to mortgages to ensure that the fees charged for the services provided are fair, proportionate, and transparent.
Currently the Firm engages with clients and provides services on a fixed fee basis irrespective of the amount of the mortgage being arranged. Having reviewed our fee basis in line with the Consumer Duty Regulation requirements the Firm has not found it necessary to make any amendments to either its service proposition or fees as these generate positive consumer outcomes and clients clearly understand the fees, they are paying for the services provided.
It is also important to note that two of the service propositions detailed relate to un-regulated advice.
Client Agreements
On the basis of the considerations outlined above the Firm has found it necessary to review and update the client agreements which form the basis of our relationships with our clients and sets out the basis on which we will do our business with the client.
As part of this review, we have recognised that in order for our arrangements with our clients to be relevant and appropriate it will be necessary for the Firm to have two distinctive Client Agreements which are specifically tailored to the specific client base ie UK resident and Repat.
These documents will be used for all new engagements and onboarding from 31 July 2023.
Existing clients will be provided with updated client agreements during the course of their reviews with their adviser following the 31 July 2023.
In order to ensure that our clients are fully informed of the considerations that have been given to our client relationships, services and charges the Firm has decided that a communication will be issued prior to 31 July 2023 which will inform clients about the Consumer Duty Regulation and the changes which the Firm has had to consider and implement as a result of the review. This will provide the opportunity for clients to raise any queries or concerns with their adviser before any changes to the arrangements are made.
Monitoring Suitability of Services
Although Skybound is comfortable with the services we offer our clients, as a Firm, we recognise that products, services and our target client criteria can be subject to change over time. It is therefore important that the Firm continuously monitor (minimum annually) and refine our service proposition to ensure that it continues to be fit for purpose.
Skybound has considered how best to monitor this and has concluded that, as part of its commitment to Consumer Duty, it will seek to implement customer feedback surveys which will be sent to a sample of our client base (based on segmentation) so that we are able to understand:-
- What clients are happy with – in relation to products and services available
- Whether there is anything they are unhappy with in relation to the product and services we offer
- Whether they consider there is anything missing from the services we offer that they would like to see
- Whether there is anything which we do offer but which is not considered to be of any value
Findings will then be reviewed, and any issues or common themes identified can then be addressed and our target market assessments and client segmentation (Appendix A and B) can be continuously updated to reflect the feedback provided.
