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Make the transition

The IFP has a clear focus as to its activity. On one hand, it is educating the consumer and practitioner about finan-cial planning and helping advisers at all levels to apply the knowledge they have acquired up to, and through, the level of Certified Financial Planner Licensee.

On the other, it is looking at working with the financial planning business model and helping many evolve and transition to a profitable and viable business.

This week, I have been speaking at dinners around the country, with Clerical Medical assessing where the market for advisers is. But it surprises me that some advisers still look to providers to make it easier for them, give all the solutions and pay large sums of commission inappropriate to the work done by the adviser and its firm.

One adviser was amazed that few seemed to be focusing on the client first, in terms of structure of the proposition. This isn’t a surprise because the adviser was a financial planner and they build their business model around the client proposition.

There are a large percentage of IFAs that are transaction-focused and struggle with transitioning to a financial planning practice. In the IFP transition work-shops the following philosophy applies:

  • Client needs must drive the business model
  • Strategy comes first, products second
  • Business is a system
  • Compliance is a process
  • Marketing maintains margins
  • The future will not look like the past
  • High commissions are not in the clients, or providers, interests and therefore cannot survive.
  • This philosophy should be the bedrock of all business planning.

    Having spent an evening discussing models, I was invited to Cheltenham by Investec to discuss similar themes, while enjoying some personal financial planning activity.

    A day out at the races allows you to consider all the financial planning fundamentals. There is the subject of attitude to risk and how much you can afford to lose, as opposed to how much money might be won; asset allocation, how much money should be put in different races and bets, and revisiting the net-worth statement and devising an excuse to provide at home, when there is a large deficit on the balance sheet.

    It is clear that one size doesn’t fit all and that we make sweeping statements to describe sectors of the market. Two advisers were arguing the case for different business models. They had different business and personal objectives and therefore both models were right. The challenge is to find a model which is profitable and scalable. The traditional network model is flawed and the opportunity now exists to look at the requirements that would allow a scalable, comprehensive financial planning business to be built that would enable clients of all types of net-worth to access quality financial planning from well qualified objective Certified Financial Planner professionals. This is not nor will ever be an argument about fees but establishing financial parameters to deliver a quality financial planning service to different clients.


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