Using external support means that IFA businesses can focus on what they are great at – managing relationships with clients.
A lot of advisers do this already by outsourcing compliance services, appointing discretionary managers, using risk profiling tools or asset allocation models, for example.
One area which is often overlooked, however, is the provision of business management support.
Management consultancy often gets a bad press. We have all heard the one about the consultant who steals your watch and then tells you the time and it is sometimes difficult to find a trusted partner who genuinely seeks to understand your business, that can help you achieve your objectives and can be trusted to act in your best interests.
This support is often made available by product providers in the expectation that the goodwill generated will strengthen the relationship with the adviser.
It is understandable that some advisers may question the motivation behind this or have doubts about the credentials or experience of the consultant but there are some criteria that might help you assess the motivation and credentials of your proposed trusted partner.
The Cris model was proposed by David Maister in his book The Trusted Advisor, where he says trust is based on Credibility plus Reliability plus Intimacy, all divided by the Self-interest shown by the consultant.
Credibility comes from experience in and out of this industry, access to global best practice in this market and others and relevant business and financial qualifications.
Qualifications are important but practical experience is vital and a good provider consultancy team should be able to tap into the collective experience of hundreds if not thousands of adviser firms which have been able to improve their productivity and profitability in many different ways.
The skill of the consultant will be in working with your own knowledge of your business to apply this experience in a way which is relevant to your unique challenges. Many providers have jumped on this band-wagon and now offer business consultancy services, so look to those who have a pedigree in this area and have a team of dedicated business consultants with relevant skills and experience.
Reliability comes through your experience of working with these individuals. Do they always do what they say they will? Have you been able to trust them in the past? Do they, as consultants, have a reputation for excellent service? Ask for case studies, and testimonials.
Intimacy is about a willing-ness to deal with the deeper personal and business issues that are often left uncovered by less experienced consultants. These are the “real” issues that often get in the way of genuine business change and can be skirted over in a by-the-numbers approach to consultancy.
Ask yourself if the consultant you are working with is really challenging you or does it all seem a little superficial? Look out for consultants who simply reproduce their last piece of work and slightly change it.
Self-interest is the most important part of the equation. All the credibility, reliability and intimacy in the world can be undone by a single action, which shows that the consultant is acting in their interests rather than yours.
If their self-interest is high, then your trust in them will be low. If they are clearly acting in your interests or, more importantly, in the best interests of a mutually beneficial relationship, then your trust in them should be high.
Some providers have a reputation for appearing to think that they know what is best for advisers or pursuing agendas that are in their interests rather than the adviser and his or her clients.
My own view is that it is entirely proper that providers should support the responsible use of their products and support the development of sust-ainable and profitable advice businesses.
Pick your partner carefully, make sure that they have the skills and experience you need, ask them for references and testimonials and when you start to work with them, consider whether it feels like they are helping you to achieve more than you could on your own.