View more on these topics

Face the fee-based challenge

Whatever shape the eventual changes to our industry take in the wake of the FSA&#39s polarisation review, what is inevitable is that our world as we know it is going to change. Any sensible business entrepreneur must exercise leadership in charting a course through the uncertain waters ahead.

We can no longer simply manage our businesses, we must now accept the challenge of defining our future strategies and informing our staff, colleagues and clients of what we are planning and why.

Michael Gerber, in his book The Emyth, asks business leaders whether they are working in their business or on their business? I believe the answer to this will determine whether or not an IFA practice will survive. Those IFA principals content to get by each day repeating the same procedures and not embracing the challenges of change will fail. What is the definition of true insanity? Repeating the same thing time and time again, yet expecting a different result.

This is the danger that lurks for any IFA business that does not seriously review its strategy in terms of the new independent or distributor status positions as announced in the CP121 proposals.

Whether you are choosing to remain independent or moving to an authorised or multi-tied position, or a combination of roles within a single practice, what must change is the way that business is organised and conducted – otherwise failure looms.

I believe the issue is not simply deciding whether to remain an independent financial adviser or to adopt some other status, it is making certain that a profitable future is more than a pipedream.

This is our daily challenge – to meet the bottom line, pay the bills and develop successful business strategies for the future. The IFA principal not only has the challenge of running the business and all the issues involved in providing technical and regulated financial advice but must now take on the additional responsibility of planning a profitable future in uncertain times ahead.

It is here that the Fee Based Advice Foundation can provide significant support to IFAs in making their transformation. This is the first time that IFAs have established a service and support organisation for fellow IFAs. Who better to coach IFAs towards a profitable future than other IFAs that are a little bit further along the track of experience? We can no longer rely on anybody else to help us.

The major product providers are interested in controlling the channels of distribution of financial products here in the UK and will focus their energy and support almost exclusively on building multi-tied distribution.

IFAs will be left to fend for themselves and those who want to continue taking remuneration on a commission basis under the proposed authorised status may well find that the 1 per cent world will soon encroach upon other areas of business besides stakeholder pensions.

Remaining independent and moving from commission to a fee basis appears a formidable challenge to IFAs who have been largely commission-based. I have started making the transformation by moving towards a fee basis in my practice over the past three years. The amazing thing is that clients will pay fees if you select the right clients and are confident of the professional level of services you provide. It does mean that you must change the way you do business.

I have learnt that it takes a complete root and branch change to the way you do business if you are going to be successful as a fee-based IFA. The focus must change and you need the support of a world-class practice manager and paraplanner. The fee-based adviser must concentrate on relationships and developing new referrals from those relationships. The fee-based IFA cannot be involved in the daily clutter of activities.

The focus must be entirely on the smaller number of clients who are paying fees and not on anything else.

We have a coaching programme already in place – The Six Strategies for Success – which runs over 12 months to include IFA principals and their practice managers. It is essential to coach the practice managers in the same way as their principals if the teamwork necessary for success is to be achieved.

The Six Strategies for Success will apply to any IFA firm accepting that they must change the way they do business in a depolarised world.

The first strategy is to take complete financial control of your future and make certain it is profitable. Strategy two involves the techniques of building a world-class support team. The third strategy focuses on creating a perfect workplace before the programme moves to the skills of selling fee-based advice, building marketing engines and, most important, taking care of yourself.

As an fee-based IFA entrepreneur, you are the most important person in your business.

The Fee Based Advice Foundation will embrace the skills of many of the UK&#39s top IFAs. We will all learn from each other. The skills and efforts of the foundation coaching team will assist our members in making the transformation, achieving a profitable future and expanding their businesses into areas they are not currently exploiting, such as working with professionals, pensions and divorce.

By working together and contributing our collective skills and experiences, we stand the best possible chance of driving our businesses forward towards a profitable future.

The Fee Based Advice Foundation can be contacted at www.feebased advice.co.uk/foundation.

Recommended

NU leads the way on term cover

Norwich Union has broken through the 300,000 barrier to become the UK’s largest writer of regular premium term assurance, according to Swiss Re Life & Health TermWatch. Its 313,444 polices written last year, up from 246,755 in 2000, give it 20 per cent of the market. Business from IFAs was up 12 per cent on […]

IFA Impartial offers CI guide

IFA Impartial is publishing a booklet designed to help consumers make an informed choice about the benefits of critical illness insurance. The guide, sponsored by a number of product providers, looks at the range of illnesses for which cover is available and the value and cost of the different benefits.

New Star International – Global Investment Fund

Wednesday, May 15, 2002 Type: Oeic Aim: Growth by investing in New Star Asian opportunities, New Star European growth, New Star global emerging markets, New Star Japan recovery, New Star UK dynamic and New Star US opportunities funds Minimum investment: Lump sum £7,000, Euro 10,000, $10,000 Place of registration: Dublin Investment split: Choice of New […]

ABI welcomes Darling&#39s pensions speech

The ABI has welcomed secretary of state for work and pensions Alistair Darling’s comprehensive approach to tackling the savings gap outlined in his speech to the NAPF last week.ABI head of life and pensions Alan Woods says: “At the ABI we have already identified the barriers to saving and have laid out the areas that […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com