Many forward planning financial planners and advisers have been looking at their business models over the last few months in preparation for the RDR and its requirements post-2012. There is a lot to think about, as you already know.
To use the aged term sorting the wheat from the chaff, we have looked at our overall processes, client proposition and, to be blunt, who we can add value to and who can add value to us.
In reality, it should not have taken the RDR and its changes to make us carry out a review of good business practice. However, I have to admit that the RDR has made us do more strategic planning onour business, rather than just working in it, in the last few months than we have in the past few years.
This has been hugely beneficial to our client proposition and I am pleased we have achieved our objectives. I would like to take all the credit for this but fellow director Esther Dadswell and external business consultant Steve Billingham might rightly have a few objections to this suggestion. Thank you to both of them for their support and initiatives, such as client segmentation.
We have also started to note these changes in our regular client newsletter to ensure that all clients know what is now only a few months away. I do not want clients having the RDR issue raised with them first from the Sunday papers in a sensationalised story.
Why has it been uncomfortable? Mainly because, following our client segmentation process, inevitably there will be some clients and enquirers who we will not be able to service into the future. This is because they will not need the service of our new client proposition or, as we all are aware, choose not to afford such services.
To help implement the change, we have started the process of communicating the detail our new proposition to these clients with service standards they may wish to select, including the opportunity to move to a “dormant” category.
Unsurprisingly, the response forms received back in the prepaid envelopes from the categories selected have requested the dormant option.
Although necessary (and some would argue good business practice), it is always a shame to effectively disengage from an existing client contact.
This does not mean that they cannot return in the future using the new proposition model and they would be more than welcome. However, as many IFAs have built their client banks in recent years, to reduce this for future years is still going against the grain in preparation for the changes that are our profession is going through.
This process probably makes our business more valuable and certainly frees up future time to concentrate on those clients that meet our model and proposition for financial planning.
This business planning inevitably leads to the often perceived dirty P word of profit. None of us are charities and those that do not address their model quickly may find out that they have been too charitable in the past and that their future business model is not profitable post-2012.
Keith Churchouse is director of Chapters Financial Limited