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David Shelton: Dealing with an increase in demand for advice

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This week there seems to be a lot of good news around for the advice market.

The Personal Finance Society has published research that confirms the scale of the auto-enrolment opportunity, service sector activity has reached a six-year high and UK growth has been revised upwards.

Adviser numbers are also up over the past six months which suggests that the advice business has a positive future.

Who knows what is round the corner and it is too early to call the end of the recession but the long-term trends look favourable. 

Should advice businesses do anything about these new circumstances?

In a word: yes. A change in the context of the market, from neutral to positive, always generates opportunity. 

It typically makes existing and prospective clients more likely to take action and it brings others into the market.

The challenge for many advice businesses is where to concentrate. It is a nice problem to have but can create real difficulties if it is not dealt with.

Apply the normal disciplines related to target marketing – identify the specific target groups, their needs and what you can do to satisfy them. Compare the outcomes because, as we know, some parts of the market will be easier to work with and more profitable compared with others.

Advice businesses are generally good at finding and retaining the right clients but there is a danger of spreading resource and service too thinly if you do not carry out this evaluation.

In all sectors, clarity of target market backed up with a proposition that is specific to it will typically result in higher profit and more satisfied clients. When the market is growing there will be an increasing number of viable niches to take advantage of this opportunity. 

Even though this is a good news story there is a word of warning.

A growing market will always attract new entrants so, even if you have more enquiries than you can handle, keep a close eye on this.

Being busy with immediate issues can be the enemy of spotting competitors or subtle market changes that may have a significant effect in the long term.

In business planning terms make sure that the opportunities do not completely outweigh the threats so that you maintain a balanced perspective on the future and avoid any unforeseen issues.

David Shelton is the author of The Business of Advice book and website www.businessofadvice.co.uk

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