It's that time of year again when we have to assess how the current year has gone and start to plan and budget for the next one.
It never fails to surprise me that each year a number of events happen which I had not anticipated.
This year has been better for us than expected. Sales are 35 per cent higher than in 1996. A significant part of our increase in turnover has come from management fees and renewals.
Admittedly, concentrating on building the renewal income has always been a main thrust of ours. However, we have tried to do this without forfeiting too much of the initial commission.
I believe we are in a transitional phase in the area of commission, giving us an opportunity to take both front-end and back-end payments. However, this won't last and
I think we will see a greater move away from high initial commission towards a greater emphasis on back-end, fund-related payments.
We will therefore continue to concentrate on building renewal commission so the business withstands any upfront reductions.
At Kelland & Partners, we continue to share all our fund-based commission with our advisers, just as they will share the problem of any reduction in front-end commission.
By sharing in this way, we retain a very high percentage of advisers and also attract those who want to build real long-term career prospects without having the continual worry of where their income is coming from.
Another reason for the increase in turnover is our commitment to provide leads. It is pointless going through the pain of recruiting people if you cannot satisfy their requirements after they have joined.
I think we often underestimate the real costs of recruiting and, because sales and marketing work on different agendas, this results in serious miscalculation when trying to build a team of advisers.
We also provide good quality back-up both in technology and PA support, which will become essential if firms are to prosper.
On the downside, I had not totally appreciated or anticipated the time and cost that we would incur on compliance and training. Even pension reviews have taken a bite.
We have been on a steep learning curve and both our admin support staff and advisers have had to step up another gear in order to satisfy the strict guidelines that we now all work within.
I hope that the controls we now have in place will guide us through next year and that some of the costs that we have incurred this year will not have to be repeated.
Wishful thinking perhaps but I don't see that regulation will get any tougher. Instead, once our regulatory body sees that we have implemented its requirements, it may relax some of the rules which do not necessarily work in clients' best interests.
Next year, my business plan is much the same as for 1997. Surround myself with good quality management and admin support staff and spend money on training and technology.
Continue to recruit from the tied sector and look to acquire IFA firms whose partners are looking to retire. Build and develop the branches we have, not by massive expansion but by a programme of manageable growth.
At the same time, we shall continue to provide good quality leads to help our new advisers find their feet.
On the marketing front, we intend to develop and test the direct-marketing side more fully. The emphasis, however, will remain on creating a greater affinity with our clients rather than trying to obtain business direct at the expense of our advisers.
I believe there is a conflict of interest if you try to do both within one company and, as we are financial advisers and not discount brokers, our softly, softly approach has been successful to date.
Hopefully, the above plans will lead to another good year. However, as a natural pessimist, I never bank on it.
Good luck to you all for 1998. I wish you a prosperous and less stressful new year.