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Tim Sargisson: What does a good adviser business look like?

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Revisiting the principal question he addressed as a panellist at last week’s PA360 North conference, Tim Sargisson stresses advisers must never lose sight of the fact the key to success is driving value for clients

Firstly, congratulations to Julian, Helen and the rest of the team at Professional Adviser for all the hard work that went in to the PA360 North conference at the Park Royal Hotel in Warrington last week. An excellent event and I am sure one that was appreciated by all who attended.

It was a pleasure to have the opportunity to be a panel member to debate the question of ‘What does a good adviser business look like?’ Without doubt, a challenging topic and certainly the 25 minutes allocated provided little time to do it justice.

A bigger challenge to answering the question, however, is that everyone in the audience no doubt had their own view about what’ good’ looks like and presumably were sitting there thinking – who the heck are you to be telling me what good looks like? That is a perfectly reasonable point!

To try and provide some sort of context to the question, however, there are clearly at least one, two or even three occasions when an adviser’s view of what good looks like will be put to the test, which I was keen to highlight in the time available.

First, as an adviser, are you looking to retire and to sell your business? According to a survey by Libertatem, 7,000 advisers are set to retire within the next five years and 13,000 over a 10-year period. That being so, put yourself in the shoes of someone looking to buy a business. Try and understand what you would look for.

Think about what ‘good’ looks like to you and what you would want to see – for example, having all records in one place and to hand. By that I do not mean a bank of filing cabinets with folders stuffed full of papers – that is not what you want to see. It is about having a database containing all the necessary client information, as well as a complete record of investments.

It is also about knowing the sources of your income, knowing and understanding your client proposition and the client segmentation that  drives the different approaches to each client group to ensure profitability. Being able to show the businesses approach to understanding risks, managing risk, combined with up-to-date risk registers.

The second occasion is following a complaint or ahead of an FCA visit – not entirely unconnected with the first, then, where ‘good is about having all the records in the right place, to be able to answer any questions in short order and to ensure a minimum level of disruption to the business.

Being able to deal with this while continuing to run the business is critical. Nine out of 10 (89%) of firms – that is, about 8,800 businesses – have between £30,000 and £80,000 of retained profits. In other words, anything that disrupts the business is bad news and good adviser businesses need to ensure they do everything possible to stay ahead of the curve.

The third ‘occasion’ is not really an occasion at all but is important for those advisers who are proactively looking to grow their business. The key to a good adviser business is understanding you need a clear focus on delivering great client outcomes, accompanied by clear client value proposition. We must never lose sight of the fact the key to success is to drive value for our clients.

‘Alexa, what are my retirement options?’ 

Let’s remember financial services is no different to any other business. Any good business model should be about making money by delivering great client outcomes. That comes down to supporting the client and, as I have said before in this space, this is about creating value. Do not forget the final ingredient either – the delivery of our service – which is now becoming increasingly important in all businesses.

The top five ‘tech’ companies are now investing $74bn (£xbn) annually in research and development. If you do not believe that that includes financial services, then dream on. ‘Alexa, what are my retirement options?’ If the likes of Toys’R’Us and Blockbuster can be brought to their knees by the tech giants, then what hope for the rest of us unless we a raise our game?

Clients do not, for example, pay advisers to do administration. So ‘good’ involves stopping doing things you should not be doing. The $74bn being pumped into R&D by the tech giants will continue to profoundly affect client expectations, which are being raised due to their interaction with many digital touchpoints.

As a result, our clients are becoming much more demanding. The bar is being raised and what is currently viewed as exceptional will become the norm. ‘Good’ is about recognising this. It is about taking a helicopter view of our businesses and seeing what needs changing – and then spending the time to make those changes.

Published on 23rd October 2018

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