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Development focus: Tips for surviving life as an adviser

Easing the pressure on advisers who are trying to make a living by helping clients

Spence-Brian-Harrison Spence-2014

The myriad pressures facing IFAs have led some to conclude that the so-called lifestyle adviser is an endangered species. Increased regulation and profitability pressures are effectively creating a cull of these individual IFAs who make their living trying to serve the best interests of their clients, often to the detriment of their bottom line. Many are finding it hard to envisage their futures and experiencing uncertainty where they used to have clarity.

However, extinction is by no means inevitable when the right strategy is applied. The key to survival is adaptation and tackling the tough decisions head on, focusing on these areas:

Ensure you have a workable plan – and stick to it

Writing a straightforward business plan may sound simplistic, but in our experience there are too many firms that operate without having – or adhering – to one. 

With no plan, it is impossible to have clear direction or decide how you are going to reach your goals. Providing a quality service cost-effectively requires close inspection of all aspects of your business. You can then start to develop a vision for the future and take the guesswork out of your growth strategy by capturing a range of efficiencies.

Manage your regulatory burden

Many IFAs find themselves mired in paperwork and struggling to stay on top of their regulatory obligations as they eat further into client-facing time. 

Engaging with a strategic partner – with either a traditional IFA or restricted model – means administration and compliance concerns are taken care of, leaving you to spend your time focusing on what you do best: forging longstanding relationships with clients based on a deep understanding of their financial needs.

Independent views

Three-quarters of participants in our recent IFA View survey said they plan to remain independent for the foreseeable future. Of course, there are valid reasons to stay independent. 

But without extensive research capabilities, providing a whole-of-market view (and proving it) can be an incredibly onerous task.

Consider if remaining independent really adds much value to your core client base or whether a restricted offering could work well for both your clients and the bottom line.

Appropriate outsourcing

Similar clients, similar investment solutions – or so the thinking goes. The FCA’s rules around suitability mean having a systematised and “replicable” investment process is crucial and arriving at the right solution requires a great deal of thought. We found more than one-third of advisory businesses still conduct all investments in-house and a fifth outsource to a discretionary fund manager, but these are not the only options. Ambitious IFAs are establishing their own discretionary fund manager to complement a restricted offering.

Segmentation

Forming a comprehensive overview of your client base –  the most and least valuable clients – and identifying where extra value can be generated could be the most beneficial exercise you ever carry out for your business. A methodical and subtle approach is key to revealing where to focus resources and providing a solid foundation for strategic decisions. Offloading less profitable clients is not the aim, but it is vital to ensure the recurring income each client generates is inextricably linked to the service they receive. Lighter touch telephone or online-only offerings are gaining traction.

Focused marketing

Effective marketing is more important than ever in the current environment. Some forward- thinking firms have successfully changed their marketing strategy to win the right sort of business. One approach is to learn from the high- street names. The best combine strong brand positioning with high levels of visibility which, in turn, drives local awareness. Smaller firms can apply similar techniques and achieve great results despite limited budgets.

Have one eye on succession and exit

Many IFAs feel exposed by the changes to fee income and charging, their fears compounded by margin pressures. Strategic partnerships can combine a roadmap for an eventual exit with the potential to expand now. Succession planning and exit should be kept in mind when planning and moving your business forward. Try to identify both business and personal needs and ambitions, the value you want from your business and how clients will be managed after you’ve moved on.

Conclusion

Those of us who have watched the UK advisory industry over the decades will know it is constantly reinventing itself and a number of innovative new propositions have already appeared on the horizon. For those advisers prepared to look at new ways of working, there are many opportunities and no need to feel squeezed out. Taking time to evaluate your business, its strengths, weaknesses and future direction will help to ensure your firm wins the survival of the fittest.

Brian Spence is managing partner at financial services consultancy Harrison Spence

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