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Independent View – Philip Rose

“Where there is no vision the people perish” – is that from the Bible&#39s Book of Proverbs or the FSA&#39s CP121? I often confuse the two.

But vision really is vital to any business that wants to flourish – and it is probably one of the greater challenges facing every IFA today. The view is so blurred by uncertainty and change that seeing beyond the next year is getting harder and harder.

A number of contributors to this column have been speculating on the difference between selling and advising – tied vs independent – and it is an important point. But it is not as important as knowing where your future clients will come from. If you are talking to yourself it does not matter if you are tied or independent.

So this week I would like to move away from the understandable obsession with sales status and make a plea to those looking to flourish to think first of marketing.

More years ago than I care to remember I was working for a unit trust group as a marketing manager but looking to return to front-line advice.

I went to see an agency (something not to do if you want a leading firm to take you on, incidentally) and told them I was interested in a marketing role with an IFA and could sell as well. “IFAs don&#39t have marketing departments,” I was told. It baffled me then and it still baffles me today – why not?

The last few years have seen a number of new mega-IFAs launched backed by City money. The accompanying press fanfare always trumpets the number of advisers that the firm expects to build over the next three years – some appear to be attempting to recruit every available RI in the land.

Rarely though is the announcement coupled with a statement of how the leads will be generated to support these huge numbers. Is it me – or is this the wrong way round?

Our own company was approached last year to be the founder firm of a new conglomerate. Out of curiosity I went to the meeting and was given a polished presentation on the intention to create a huge (and very expensive to run) firm.

“Where will you get the sales leads from and how will you cope with stakeholder remuneration levels?” I asked. “Oh yes,” they replied, “we will need to look at that.” But here is the frightening point – they had already been given the money to form the firm. Mere details such as how they would ever find a client were not important.

I am one of those who believes in building a company in the opposite way – marketing led. Nothing seems more pointless or demoralising than having a highly skilled team of advisers sitting waiting for leads. I still believe that designing a good marketing campaign is one of the most difficult challenges.

It is certainly the field that is the most obvious when it fails – talking your way out of a 0.1 per cent response to a mailing requires huge imagination.

Do not worry about failure if you do decide to expand your marketing – it is inevitable. A one-in-three success rate is excellent. The trick is to test everything so that you only lose a little money with the failures.

I always compare a marketing exercise to an archer firing at a target, except the marketing target has no inner or outer ring – you either hit the bull&#39s-eye or miss completely. When your test does hit the bull follow up immediately to take full advantage.

My point about marketing is not so narrow as it seems, as it returns to the question of where we, as IFAs, are heading. We know that independent advice will most likely lose its protected position with the death of polarisation.

We know, too, that our basis of remuneration is likely to come under pressure and even fundamental question. But we all totally accept that independent advice is best for clients.

The IFA market suffers from its cottage industry status with the vast majority of firms having fewer than four advisers. This makes our voice within the financial market much feebler than it deserves – particularly when up against the massive marketing budgets of the banks and product providers. IFAP does a good job but sometimes it seems to be one voice crying in the wilderness.

As market trends stand I think it is inevitable that IFA firms must become larger and better capitalised if we are to avoid becoming a very small, niche group within the adviser universe.

The day of the national firm may well be approaching but if that is the case it is likely to be those with lead generation in place that will triumph. Marketing will yet carry the day.

Philip Rose is managing director of Wentworth Rose

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