Putting the right money in the right hands at the right time for clients should be the maxim of any financial adviser. It is even more important for those IFAs that have begun to expand into the global market.
As an established IFA company of 25 years, our decision to expand on a UK and worldwide basis was easy to make. Indeed, it was a natural progression, forming part of our plans to become a recognised worldwide wealth management company. Although this sounds an onerous task, much of it was simple common sense.
There are 10 key questions that should be asked of your business in order to determine whether your expansion is a viable proposition.
What type of business are you currently writing? Are you writing business in predominately one or two areas, such as pensions and protection, or do you have a broad range of product areas and services?
Do you specialise in any area or have specialists within your company?
What is the most profitable area of your business and the least profitable?
As a company, can you survive in your present state for the next three to five years?
Do you have the necessary infrastructure ready to roll out when needed, namely, the compliance and training systems to cope with the increase in business volumes?
What is the current status of your IT systems?
Do you need to improve them?
Have you considered merging with a similar type of company or one that would complement your operation?
Are your administrative systems what they should be? Will they be able to cope with new and different types of business?
Are you able to expand with your present team or will you need experts in particular areas in order to achieve any growth at all?
How will you fund expansion? Venture capitalists? Bank loans? Private capital?
Being able to answer these questions will focus your business and determine whether or not you need or are able to expand.
There are many pitfalls and, inevitably, there is a lot of pain involved. For example, the company you founded may no longer be yours. Changes and decisions that you would have made alone may no longer be yours to make.
You will certainly be involved in endless meetings but this is a necessary process of expansion. Accountants' and solicitors' bills start to mount but this is inevitable in order to do the job properly.
There are a few short cuts and simple ways of achieving an expansion of any type. When we first looked at the Far East, we discovered that our managing director not only knew but had worked with his counterpart in a Tokyo financial advisory company over 20 years ago. The similarities between the two operations made it a logical conclusion for the two to join forces and become part of a group of companies. Probably the most important lesson we learnt was not to try to reinvent the wheel. We had no experience in the Far East and yet we now have an operation that is expanding at double the rate it was before we joined forces.
To expand further than just regionally, you almost certainly need a massive financial investment and this inevitably means readying your company for a flotation or preparing a number of companies to come together as a result of a float. This is an even more important reason for making sure that, not only for your clients but also for your company. the right money is in the right hands at the right time.
Tony Wright-Jones is director of marketing at The Lamensdorf Group