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Through the looking glass – managing your business for greater success

Sue Whitbread considers how advisers can take a different approach to creating long term business success – and achieve a great work/life balance into the bargain

To survive, let alone thrive, in this new world, advisers are making big changes to the service that they offer and to the structure of their businesses.  When it comes to business profitability and sustainability, how to do you make sure that not only are you covering your costs, but you can also deliver the returns you want for the business and keep your clients happy too?

The fact remains that the costs of operating a financial planning business are rising, and that these play a significant part in the fees ultimately charged to clients. But is there more to profitability than this?

Keeping the regulator happy

It’s becoming clearer that the FCA has moved away from regulation based on the distribution of products, and is much more focused on service standards, something which is likely to increase in future.

Advisers have needed to clearly demonstrate the value-added nature of the service they provide for clients to stand a chance of building the strong, long-term client relationships which form the basis of a sound and profitable business. Do this, and you’re likely to keep the regulator happy too.

Yes, you’ll need to manage your costs effectively, but are you charging enough? Have you got your proposition right? Are you retaining your key clients? Have you got too many clients?

Sharpen your client proposition

Of course, the heart of a great financial planning business is having a well-organised and streamlined client proposition which puts clients’ needs right at the core. With this in place, clients can recognise the value of the professional service that they are receiving.  They trust the firm and the people that work with them. They love having a meaningful plan to work towards and recognise that they can deal with any issues as and when they crop up.  This brings peace of mind from knowing they are on track to getting what they want out of life – achieving their goals in other words. They acknowledge that their adviser is sitting on the same side of the table as them and clearly putting their interests and goals first. To secure your clients’ loyalty you simply must be worthy of their trust. They also appreciate that there is an ongoing cost for this professional and long term service, but that in most cases, the value far outstrips the cost.

Work on client retention

Successful financial planning firms report that the majority of their income comes through building long-term relationships with clients who trust them – ie from client retention rather than client acquisition.  They avoid the urge to say “yes” to every prospect who comes along, to do some work with them for a short time and perhaps never see them again. Done without real focus, the client acquisition process can be expensive. We’re not just talking about marketing costs here.  Beyond that, you and your team will invest significant amounts of time in the discovery and fact finding parts of the financial planning process with any new prospect you encounter. Over the long term, this investment will of course be worthwhile if the client relationship develops, but there is no point in doing it if the client isn’t a good fit for your business in the first place, or doesn’t renew in subsequent years.

Focusing too much of your efforts on client acquisition will mean that you feel like you’re super busy. Not a moment to spare. But is it the right kind of busy? There is a risk that by spending too much time spent here, your established and long- term clients can feel a little neglected because they might not be receiving the service they want and expect.

Being profitable means recognising where your repeatable revenue streams are coming from. Ensuring that you only take on new clients that you can service effectively at the promised price is important. Have you identified your ideal client profile? If not, now is the time to do so. Client segmentation is also essential, if you’ve not already done it. However, of ultimate importance is maintaining excellent relationships with your existing clients. Taking the time to work out exactly how you can exceed their expectations each and every year is key.

Nuture your client relationships

Part of this is in the way that businesses and advisers engage with clients outside the world of financial planning, of the advice process, of investments and into building and nurturing the relationship side of things.  We all know that people buy people. There are many great examples of firms who are on the front foot when it comes to generating and maintaining high quality client relationships, which build on the trust already established through the financial planning process.  Whether it’s through face to face events such as client lunches, conferences or any other event where you can get to know them a bit better. Of course there are always sponsorship opportunities at sporting events and the likes, but don’t forget the value of building engagement through blogs, newsletters, social media and a host of other indirect means. Firms are getting better at reaching out and cementing the client relationships upon which the business depends – and managing to build their brand into the bargain.

Getting the fee structure right

Do you ever worry that clients will resist the level of fees you charge? If so, it’s time to shift your thinking – away from the price tag and onto the significant value you deliver in return for that fee. Get that right and that’s what really matters to your clients. Pricing confidence is another attribute of successful financial planning firms. They believe in the price worthy value of their service – and so do their teams. Think about your very best clients. The ones you have great relationships with and who you look forward to meeting up with. Are they price sensitive? No way. You are their trusted adviser. They have invested a huge amount of time and emotional energy into the relationship – as well as money. They are simply not going to walk away because you decide to review your charges.

A poor financial planner?

You need to ensure that the fees you charge are sufficient for you to live the lifestyle that you want.   The late David Norton, a leading light in the UK financial planning profession, was famous for repeating the mantra that “a poor financial planner is a poor financial planner”.  It makes a lot of sense. If you want to work just four days a week, price that in. Want to avoid working for the whole of August each year? Price that in too. Whatever you need to earn to live a fulfilled and happy life, that’s what will underpin the amount you need to charge your clients, to be able to help them to live the life they want to, you need to do the same. Lead by example.  For your business to prosper, you need to prosper too. Get that right and it really is win-win.