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In the interim

There are times when a financial services business will need expert assistance from outside to make the most of a short-term opportunity or cope with an unexpected crisis. Here are just a few examples. A major acquisition by a national IFA firm or the merger of two networks will cause tremendous upheaval for all concerned. With the right kind of support from outside, the businesses should be better equipped to create a more effective whole, reducing the risk of staff and member firm defections that can follow such an event.

A life office or fund management house can find itself unable to launch a new product in time to benefit from a specific window of opportunity or to meet the deadline set for new FSA requirements. But a little external help could make all the difference. This may take the shape of an experienced manager to run the project or a technical guru to write much of the promotional or regulatory copy.

The sudden departure of an executive director or key senior manager can leave a big void. Recruiting a replacement of the calibre required can take months. Executive search can be a long drawn out process. How will the business be able to cope in the meantime? The solution lies in importing expertise from outside, but only for as long as it is needed.

Where is this high-level assistance to come from? Interim management is the answer. The concept dates back to 1970s Holland, when Dutch businesses were looking for ways of combating the strict employment legislation of that time. Since the late 1980s, our own UK interim management market has blossomed into a solution for businesses looking for a sophisticated and flexible alternative to more traditional management consultancy services.

Interim management is a flexible resource which enables businesses to import senior management or specialist skills when they need them. Users have access to a pool of experts covering a wide spectrum of experience, skills and professional qualifications.

It can provide interim resources in the form of actuaries, accountants and other relevant professionals, with backgrounds that range from board level directorships to specialist technical project management. Their experience and expertise range across a number of fields. These include: new product development; sales and marketing; actuarial and risk management; compliance and regulation; finance; information technology; board management and strategy; project and programme management; supply chain and procurement; and human resources.

Individuals have to pass through a rigorous selection process to join this consultancy&#39s pool of experts on call. All run their own limited companies and carry professional indemnity insurance cover. The positions they are called on to fill may be of a short-term nature, but these are professionals who have decided to make interim management their long-term career. It is not merely a way of filling in time and any earnings gap that may exist when they are between full-time salaried positions.

In the early days, big companies, such as the major life offices and fund management houses, were the main users of interim management services. Since then, however, the client lists have grown to include smaller businesses with IFAs among them. The roles that interim managers are asked to fill are many and varied. An assignment may last anything between a few weeks and a couple of years. The average length is about seven months. At the outset, a senior consultant from the interim management firm will visit the client and agree the terms (key deliverables, timetable, budget, and so on) of the assignment.

A short list of no more than three candidates will then be provided together with a full written brief explaining the rationale behind their selection. he client makes its choice and the individual selected is ready to start work within its business.

The interim management consultancy manages the assignment from start to finish, with the cost depending on the charge out rate for the particular professional involved. Hiring an individual with the powers and experience needed to fill a board level position for a large company will naturally be more expensive than the fees charged for bringing in an expert to fit in lower down the corporate hierarchy in a smaller business.

Finally, a case study to give you an idea of what is involved. A national IFA firm is keen to build up its presence in the North of England and identifies a particular independent adviser business with offices on both sides of the Pennines as an acquisition target.

Once the initial negotiations have started, the directors of the would-be buyer decide to call in outside help. One option is to approach the consulting arm of one of the big accountancy practices but the board opt instead for the more specialised and hands-on alternative of interim management.

The individual selected has had plenty of experience of handling the various issues (cultural as well as financial) that are part and parcel of the merger and acquisition scenario. In their role of “super-temp” quasi-board member, they apply their expertise to ensure the wheels run smoothly and that all key staff – including the all-important business-generating authorised advisers – stay on board. Then, once the integration processes are over, they leave the full-time executive team in control.

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