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Tom Hegarty: What is your client capacity?

Figures show advisers are not taking on enough clients, but this can be fixed with a closer look at efficiency

Back in the day, advisers would often have hundreds, if not thousands, of clients who would receive advice as and when they needed it. But changes in regulation from the RDR and, more recently, Mifid II mean advice must now be provided on at least an annual basis to justify ongoing fee remuneration.

These ongoing suitability requirements, alongside legislation like GDPR, have extended the time taken to conduct the advice process, and have therefore reduced the number of clients who can receive regular advice.

There is no doubt these changes in regulation have also contributed to the advice gap.

According to the Financial Advice Market Review Baseline Report, published in June 2017, the average number of clients per adviser that receive regular advice is 121. The report also identifies a higher demand for advice than this capacity can provide.

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When discussing these findings at our best practice meetings, we have found the actual number of clients who receive advice at least annually varies from 35 to 400, depending on the business model adopted.

It may be that advisers looking after fewer clients than the average make this choice deliberately in order to strike a better work/life balance, or they may see their clients on a more frequent basis than annually. These advisers may also still be building up their client bank. Those with more clients than the average may be working evenings and weekends to keep up to date with their workload, or might make it work using technology and additional staff resource.

Optimum number

The optimum number of clients per adviser is as many as possible without affecting work/life balance and ensuring all receive high-quality advice, while meeting the relevant regulatory requirements.

An adviser in the position of feeling at maximum capacity but having very little time should look carefully at the options available.

Advisers make very expensive administrators but often struggle to let go of control and delegate tasks others could do on their behalf.

Their main area of expertise is seeing clients, yet most admit to only spending around 30 per cent of their time with them.

If they could pass the other 70 per cent of their work to others, it would free up a huge amount of time to improve the quality of advice and enable them to take on more clients.

Support could be found in outsourcing administrative and paraplanning tasks, which can be paid for on an hourly basis or per case. The main benefit of outsourcing is that it is fully scalable, starting out gradually before building up as more confidence is gained.

Tom Hegarty: The gold standard in paraplanning

It may then become more cost-effective to recruit someone into the business. Remember, it is not always necessary to hire someone full-time; someone part-time could be a very viable option.

It would also be less risky to take on two people on a part-time basis in case one were to leave. The idea would be to grow this resource and delegate more tasks over time.

Technology can also increase efficiencies, reducing the amount of administration and freeing up more time to spend with clients.

The paradox here is that time is often needed to design and establish good systems and processes, but the end results could bring huge benefits to any business.

Additional admin resource can be used to set up good processes, which improve business sustainability over the long term.

The main issue advisers continue to face is finding the time to provide a quality service to clients.

Most feel as though they are at their capacity and cannot take on any more without impacting their current offering.

I urge advisers to look at technology, outsourcing and recruitment options, which will allow them to increase capacity, improve quality and help provide advice solutions to more people.

Tom Hegarty is managing director at NMBA



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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Great in theory Tom, but presumably you have never tried to recruit an experienced paraplanner or had to deal on a daily basis with the inadequacies of back-office systems and platforms

    • Quite right David. Since insurers pulled back on regional offices it is very hard to recruit suitable employees for a myriad of positions, simply because there is so little experience out there now.

  2. As to numbers of clients’ it’s not the numbers we have to consider, it’s the complexity and thinking time for each client which varies.
    In my opnion. the best way to get the right admin support and paraplanners is to plan ahead by about 2 years and always recruit BEFORE you need someone. It sounds like Sonia Wheeler works on the same basis as I do, it’s about recruiting the right person often at the wrong time (for the business, but not the recruit) rather than the wrong person at the right time and then having to try and manage them out later.

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