IFAs believe a boom in the equity-release market over the next five years could increase their income by as much as 20 per cent a year, according to consultancy TillinghastTowers Perrin.
Its research found that 80 per cent of advisers predict they will conduct more equity release business in future. One in eight expect their annual income to rise by between 10 and 20 per cent by 2008.
The survey questioned 50 IFAs on their expectations for the growth of the market, which was worth £750m in 2002, up from £572m in 2001.
Tillinghast-Towers Perrin says it shows a big jump from the current situation where 40 per cent of firms do no equity release business and 52 per cent generate between 1 and 5 per cent of their income from it.
Consultant Stuart Robinson says: “Many IFAs believe the situation is changing and there is considerable evidence to support this. The market is worth around £750m a year but it has the potential for £4bn to £5bn of new business each year for the next decade.”
SRCE: Money Marketing
HDLN: Mind your P's and queues will form
SBHD: All successful businesses take the time to plan ahead. Don't forget that prior preparation prevents poor performance, says LIA president and chairman of Executive Advisory Services Gavin Tisshaw BYLN:
The start of a year brings an opportunity to reassess where your business is heading. To help in this exercise, let me put forward some questions you should be considering.
What changes are you going to make in your business practices?
How will this year be different for you?
Which extra professional qualifications are you going to take?
What is your area of excellence – your speciality?
Are you getting the most out of your professional associations by attending events, improving your technical and other skills, mixing with your peers, sharing ideas and opportunities and getting involved?
Can you afford to operate in an environment of reducing commission and increasing overheads?
When and how do you plan to retire and how realistic is this?
How committed are you to financial services?
Do you really believe in what you do for a living?
What can we do to prepare ourselves for change and take advantage of the undoubted opportunities that will arise? I think there are three choices:
Do nothing. In which case, I believe you will be out of business within two years because the old business models cannot work for long when profit and overheads are both going in the wrong directions.
Make assumptions about the exact nature of the marketplace and make wholesale changes on the basis of these. This is a brave and high-risk move if you get it wrong although if your thinking is correct it will in time give you a market edge.
Make sure you really know and understand both your business and your clients and agree your strategy, objectives and tactics for the future. As part of this process, you need to identify the issues involved and the risks so you are as prepared as possible. After all, is this not what we do for our clients in helping them plan their finances for the future and protect against unforeseen circumstances in the meantime?
My preferred option is the third as this carries the lowest risk factors but it does take time and effort both in the review and the implementation. But no one said being in business was easy.
If you need convincing of the need for this exercise, just look at the businesses that stand out from the crowd and how they are run. They all take time out to plan their future and know exactly where they want to be.
Whoever said “The only certainty in life is death and taxes” missed out the third certainty of change.
This year will be no exception. So, do not forget the five p's of business planning: “Prior preparation prevents poor performance.”
I would like to leave you with a few more questions, merely to be thought-provoking in a few areas we all need to consider.
Redefining ourselves. We need to consider exactly what services we offer to our clients. Is it advice, products or both? Are we planners or advisers?
Does our method of remuneration reflect what we perceive ourselves to be? Should we be implementing a menu approach sooner rather than later?
Do we try to be all things to all people? Is certain work costing us more than we earn from it and should we turn it down? Do we know the true cost of transacting a piece of business?
How much pro bono work can we afford to do? What are our moral obligations to existing clients, to our staff and to ourselves?
What is it our clients want from us. Do we really know and are we delivering it? Do we deliver what we promise and do we really go that extra mile? Are we concentrating sufficiently on our top clients or are we spending too much time on everyone else?