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Neil Liversidge: When adviser networking doesn’t work

Networking is generally an excellent way to do business; if it is done right.

My networking method is simple: we maintain the best possible business relationships with our suppliers. How do we do that? By paying on the nail as soon as a job is done and by referring trustworthy suppliers to our own clients and other contacts.

When we set up our first office, the signage supplier was amazed to be paid the day he invoiced us. When my accountant visits for our year end, his fee is in his bank account before he gets back to his office.

That said, another accountant once told me to my face that I was stupid to pay suppliers promptly. He strung everyone out as long as possible. The old government-funded Business Link “guru” had told me much the same. Ten years on, that accountant’s business is on life-support and Business Link, whose “advice” was among the most worthless I have ever had, is effectively defunct.

In the meantime, most of our suppliers have become our clients and have referred many others to us. It is an old-fashioned view, I know, but I have always believed that the worker has the right to his pay once the job is done.

The result is that whenever we need a job doing, we get it done by professionals we feel comfortable referring to our clients. That is important to us. We want to do all we can to prevent our clients being ripped off.

Builders, electricians, plasterers and plumbers all feature on the trusted list we give clients, along with the likes of accountants, lawyers and architects.

My experience of formal networking has been less enjoyable. I joined one of the best-known franchises in 2002, which originally consisted of small and medium-sized business owners. Membership was eagerly sought and standards were high. Copycat groups and the franchisee’s eagerness to maximise profits ruined it.

In theory, it operated a “one member per category” rule but categories were sliced and diced to rake in more fees while reducing the quantity and quality of referrals. The shift in emphasis from quality to quantity of members also resulted in a preponderance of homeworking pill-pushers, magic bracelet sellers and unqualified amateur medics of all stripes, including “counsellors” dabbling in amateur psychology.

I would not readily put anyone else’s business down but there are some businesses nobody should be in unless properly qualified; the two most obvious being health and wealth. We were expected to trust snake oil salesmen who were often treating the client with one hand while holding the “how to” manual in the other. Suspension of disbelief was never part of my skill set so I quit.

I seriously doubt the franchised model for networking groups remains viable. If I were to start my own group I would run it as a co-operative, with no fees to pay to any franchisee. I would also run it on open and democratic lines, not the secret squirrel club model it used.

But if you want to network successfully without being part of a formal group, the formula is simple: be a good, fair, paying customer.

Neil Liversidge is managing director of West Riding Personal Financial Solutions

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. I also pay promptly Neil, but to add some balance to the matter, we are fortunate, in that payments to us (especially with adviser fee facilitation) are pretty much immediate, affording us the opportunity to be benevolent to our suppliers.

    You are absolutely right though!

  2. @Steve D: You make a most important point re’ facilitation. It is one I have repeatedly made to the regulators. There would be no surer way of INCREASING the cost of advice than by banning facilitation. Credit control costs money and all business costs are ultimately paid by the client. Removing bad payers from the equation streamlines business and reduces costs to the end user – the client.

  3. Well said Neil.. Clearly I am old-fashioned too. Without wishing to become too political too but often I find it is those in business on the Left who have other persuasions that absolute integrity and ethics in these quarters somehow (it should be the opposite of course in ‘theory’)… maybe that is just me….

  4. Hi Steve, thanks for you insights.

    On the networking front I have had a really different experience with two groups. The first is Bristol Junior Chamber of Commerce (BJC) which has been great a forming genuine relationships on both a personal and professional level.

    And secondly through a group called Bristol Private Clients which I co-founded with two other financial professionals that I met through BJC.

    There is no charge to join Bristol Private Clients and we mostly provide and enjoyable environment for people in complementary professions to meet. We are relatively new but so far the feedback has been great.

    Thanks,

    Charles

    http://www.bristolprivateclients.com/

    • Interesting insight Charles and you correctly identify GENUINE relationships as being one key, with the emphasis on quality membership being the other. With franchised networking groups the emphasis from the franchisee tends, obviously, to be more on numbers, to up the fee take, hence the problems. I once knew somebody in this business who applied to be a magistrate as a networking strategy. He thought it would enable him to meet more wealthy upper-crust types who he’d be able to recruit as clients. (Presumably, he was thinking of other magistrates, not the defendants he’d be trying). When I suggested that a more laudable motive for his application might be a sense of public duty, he looked at me like I was mad. It didn’t work for him of course; nobody likes a phony and nobody gives business to those they dislike or distrust.

  5. Neil

    Spot on – I too pay on the nail and always have done both in business and personally. However I never needed facilitation as I am happy to say my clients paid their fees reasonably promptly.

    That being said I also found that for some suppliers barter worked well. I did the pension they did the decorating/plumbing etc.

    Very tax efficient!

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