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The need for collective strength

Rob Reid Director The Ideas Lab

The title of this magazine sums up the major changes needed by advisers if they are to prosper in the future. You may note that I have not mentioned RDR and why should I? The RDR is a catalyst. It’s not the sole reason that advisers and, more importantly, their firms have to change. We have to stop being a collective of artisans and become real businesses with brands and values. I recall giving a lecture at an event designed to help advisers build their business over five years ago.

At the event, a leading (a prefix they seem to have acquired and not necessarily earned) IFA principal stated that they had a brand but that all the advisers could do their own thing (or is it thang?) I was lost for words as this intelligent individual actually believed that his bunch of artisans actually constituted a business as opposed to a collective.

In stark contrast, Kevin has identified that you need to get out more and look back into your business if you are really to understand what your firm needs to progress. When I head for the US this October, I will take with me up to six UK IFAs who will be part of a study tour looking
at successful US-based businesses and taking elements of their approach to deploy or adapt back in the UK.

Kevin also makes a significant point when he talks of the need for structures. Process is the cornerstone of any successful firm and a project plan for transition will also be essential, as is getting the buy in of all of the staff. After all, they all interact with the clients so they all need to understand and value the proposition.

Taking the approach of posing a series of difficult questions to yourself and your colleagues is an excellent way of making sure that you understand the magnitude of the task at hand

His reflections on the number of advisers in a state of denial concern me. Missing out on an opportunity for improvement by waiting around for a change of government is not strategic, it’s stupid. Do firms really think they will compete when they are still resisting the move to
diploma? If I am in competition at the moment I ask the client to find out the tested level of competence of the other adviser, I then explain what
the old FPC level actually was in terms of exam level. Safe to say I have not lost business to any refusniks despite their EXPERIENCE.

The real wake-up call comes when Kevin talks of valuations. If a firm’s advisers are not at diploma level there must be a discount to value. If they are still hooked onto indemnity commission then this too reduces their valuation. After all, if a retiring IFA has made no effort to take the exams and is commission-dependent then does that firm have any value? Possibly but the multiple will be 1 to 1.5x at most. So failing to change can seriously damage your wealth.

Taking the approach of posing a series of difficult questions to yourself and your colleagues is an excellent way of making sure you understand the magnitude of the task at hand. Change is a bit like eating an elephant – best tackled in small chunks. Kevin may not be finished but he is moving positively in the right direction. I look forward to reading of how he gets on with that part of the change project.

But he has made a great start, looking forward, with no whining, and not wishing that it all won’t happen. In the absence of a Tardis, the loss of time is something not even the most experienced IFA can recover from, so let’s get busy one and all.

If any readers are interested in taking in the study tour in October which includes the FPA conference please drop me a line at


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