Business of advice - The nerve ends of your business

26 January 2010 2:43 pm

BUSINESS OF ADVICE: SERIALISATION –

MANAGEMENT INFORMATION: THE NERVE ENDS OF YOUR BUSINESS

 

DAVID SHELTON: Head of IFA Consultancy Service – Scottish Widows

Increased competition, the pace of change and regulatory requirements mean that advisory businesses must have readily available management information.

Many advice businesses have a wealth of data, but do not have the resources to draw out what is really useful to them. In addition, there is a myth that you need huge amounts of data to monitor your business. This is really not the case.

To test the effectiveness of your management information process, answer the following questions:

·     Do you have a set of data that is informative and which you act on?

·     Do you have data that are wider than sales figures and top line financial information?

·     Do you involve your senior team in reviewing the data?

·     Are the data reviewed on a regular basis (e.g. weekly or monthly)?

·     Are the data collated properly and clearly presented?

·     Do your staff see the data and, where relevant, discuss them with you?

·     Can you drill down into the really important areas if you need to?

·     Does your management information pick up the key Treating Customers Fairly (TCF) measures?

If you have answered ‘Yes’ to most of these questions, your management information, and more importantly the use of it, are in good shape. If you are not in this position, you are in the majority, but should recognise that putting this right may not be as large a task as it seems.

You need to concentrate on what is important and only look at the detail if you suspect a problem. As a result, many firms use the dashboard approach that deals with the headlines with the option of getting into greater detail if concerns arise.

To make sure your management information process works well, you should:

·     Identify the data that is going to be useful and tell you something.

·     Work out who will produce it and how frequently you need to see it.

·     Link it to the data collection exercise for the Retail Mediation Activities Return (RMAR).

·     Set clear targets for all data, so you can monitor progress.

·     Always look for the trends and compare over time or against industry benchmarks if they exist.

·     Make sure you have a specific point in your management meetings when the data will be discussed.

·     Make sure actions are documented and followed up: this is particularly important to provide evidence to the FSA of how well the business is being run, including TCF monitoring and management.

·     Share as much of this information as possible with your staff.

The following table is the recommended dashboard data set that you should use in your business. It will pick up virtually all the TCF management information, which means that you do not have to set up the latter as a separate task. As you can see, there are just six categories and 22 lines of data, of which 13 are monitored monthly.

If you tabulate this data to show year to date, you will have a good picture of the main operating areas of the business. In addition, the monthly meetings that review this data should call for short reports from those responsible for the main business functions, so that, where necessary, you have context and detail to go with the numbers.

As with many exercises there is an investment of time to set this up, but the degree of control it provides will rapidly outweigh the initial effort.

Serialised from The Business of Advice, the definitive guide to running a financial advice business. Details and online purchase (£145) at: www.businessofadvice.co.uk.

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