Observations from 2024

2024 – Here we are, another year older and what have we got to show for it?

As it turns out, quite a lot.

Here’s what I’ve noticed this past 12 months:

1. The More Things Change The More They Stay The Same

Consolidation of advisory firms is still a massive trend in our market. (I wrote about this at length in last year’s observations blog – you can read it here)

What I’m seeing as a result of all that activity is some advisers “going again” because the post-acquisition experience has been so poor for clients.

One of the best recruiting tips I heard this year was to keep an eye on firms that are acquired or ‘merging’. The sale process is very unsettling for the existing staff and it’s a great time for you to go and proactively headhunt some of them for your own business.

Offer them a nicer alternative in your amazing business that is still 100% client-focused.

Succession Planning:

Plenty of firms I’m speaking to do not want to sell to a consolidator. They want to create internal buyers and successors.

Here’s a quote I heard from Alan Moore from XY Planning Network at the Insiders Forum conference in Denver recently:

“It’s comical that consolidators are predicting the death of the small independently owned firm.”

Jumping on Alan’s point, I’ve been hearing about the death of the small advisory firm for the whole of my career (currently 34 years).

Alan went on to say, the Accounting industry is mostly still made up of small firms. Consolidation does happen but new smaller firms emerge and still serve most people.

Don’t believe the self-serving BS. Stay focused on getting a little better every day.

Kate Healy from Advocate IQ did a great session at the NAPFA Large Firms Forum in Arizona earlier this year. One of my favourite takeaways was this:

“Talent management becomes your succession plan”

If you are serious about succession then create an employer brand that tells potential recruits all about your values and focus. Get your marketing people to join it up with your consumer-facing brand.

Go to where the talent is, don’t just use job boards and Linked In. Connect with your local University and try to identify talent at the beginning of a career. (See last week’s blog about FP Advance partnering with Coventry University).

Leadership:

In my work with my Uncover Your Business Potential (UYBP) delegates and graduate firms I’ve been building an ever greater focus on leadership.

I heard some great food for thought from Carolynne Thomas – Partner at CRA, also at the NAPFA Large Firms Forum. She made the point that:

Leadership is about what you do.

You need leadership credibility. What does that look like?

a.) Competence – what you know
b.) Character – who you are

Most people get promoted because of a.)

So they may not have credibility on b.)

She went on to describe how you empower leaders and future leaders in your organisation.

There are four levels of decision-making empowerment:

• Level 1 – I’ve got this decision, “What do you think boss?”
• Level 2 – I’ve got this decision, “Here’s what I think. What do you think?”
• Level 3 – I’ve got this decision. “Here’s what I’m intending to do. Pull me up boss if you think that’s wrong.”
• Level 4 – I had this decision. “Here’s what I did.”

I really like this as a simple framework for giving different team members, different levels of decision-making authority.

Acquisitions:

I still speak to too many firms AFTER they’ve made an acquisition, where it would have been better not to acquire.

Why?

They haven’t thought it through and have often acquired a few good clients and a bunch of other clients that will take them 12-24 months to sort through, only to realise they don’t fit with where the firm is headed.

If you are a firm that specialises in working with (for example) business owners and executives, do yourself a favour and make sure you are acquiring a client bank full of those clients. Some focus early in the thinking phase would save most firms 6-9 months of wasted “discussions”.

And here’s a quote to keep in mind if you are acquiring:

“Bedding in an acquisition is like changing a car tyre while the car is still moving.”

The “cost” (which is never measured or captured in your P&L) is enormous. And what could you have done in a parallel Universe if you focused on fixing your organic growth problem for 2-3 years?

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2. Technology:

Clearly, the evolution of technology is an even more important focus for financial planning firms this year. Here are some issues to think about as you head into 2025.

Joel Bruckenstein, founder of the T3 conference highlighted the three legs of technology for your business at the NAPFA conference:

1. Data
2. Cybersecurity
3. AI

Data:

Data is your digital gold but are you mining it?

Who owns it?

Contracts are very important for your data. Read them carefully BEFORE you have issues trying to get it back from a supplier.

How do you search your own data and documents from the past?

Cybersecurity:

When you are custodian of your own data you are going to have to do a lot more. Zero Trust Strategies need to be implemented and if you are not familiar with this term you are at risk.

Cyber Insurance:

Having a policy doesn’t mean you are ok. The insurance companies usually specify “if you do these things” you will be covered.

Are you doing all of those things? It would be very easy to be in breach and find yourself not covered.

What I’m seeing in the market:

George Cooper from Advice Flow spoke to a group of my UYBP Graduates in October. Advice Flow specialises in creating customised APIs – i.e. automating workflows and getting your disparate systems to talk to each other.

Some of the interesting projects he’s been involved in include:

• Automating initial client enquiries and booking first meetings.

This reduced friction and increased successful initial engagement with clients.

• Creating a customised AI system to record first meetings and create notes, instead of buying an off-the-shelf AI system (like most advisers are doing).

Why is this an interesting idea?

Apparently, it’s not that difficult and most of the systems advisers are using are built on the same underlying tech.

But by building a custom solution, the firm in question has designed it to pull out customised key points (relevant to financial planning) and sort them under headings like Tax, Estate Planning, Investment, Protection, Pensions, Next Actions etc.

This saves them time having to edit and sort the long AI meeting transcript themselves.

Additionally, the data from all of these AI transcripts is stored outside of the normal CRM back-office system. The data is stored in a format that will allow the firm to access and interrogate it more effectively in the future. This seems like a big win, allowing advisers to finally own and control their data.

• Automating payments so clients can use Apple Pay and other common payment apps. By doing so, outstanding invoices are often paid by clients in seconds.

• They have set up automated emails and reminders via SMS. The SMS contact with clients generates much higher and faster response rates than email.

Automating things and using technology is helping create the right blend of a slick digital experience and personal service.

AI:

There’s a lot of noise and loads of development in the AI space.

Last year I feared the speed of AI development. Now I’m thinking it’s simply new software, and like any new software yes, you need to play with it to find out the best use cases for you and your business. We learn from play.

However, you DO NOT need to be the very first person to try a new piece of kit (unless you love that kind of thing). Listen for what is actually working in the marketplace and be an early adopter, not a first mover.

First Steps For Using AI;

• Get some policies and procedures in place. When will we use it and when not?
• Find the current beneficial use cases that you can safely use now. (e.g. Chat GPT, Meeting note summaries)
• 75% of employees are worried AI will take their job. So show them how to work with AI.

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3. New Ideas:

During the year I connected with two amazing new financial planning offerings that I’m hoping will shake up the market.

In my 2021 white paper, What Next For Financial Planning In The UK? I looked at Clayton Christensen’s theory of disruption and set out how firms looking to work with the next generations of younger accumulation-style clients would need to think very differently about the business model.

Here are two great new offerings that have embraced that challenge and created two different approaches:

• Money Means – an online DIY “advice” service that will be launching soon.
• Lifetime FM – a beautiful and intelligent mix of online and human advice.

These might be great places to refer off any prospects or clients that don’t fit your current financial planning model.

New fee models:

Earlier this year, I did an interview with Mark Berg, CEO at Timothy Financial Counsel, which might just be the best hourly rate financial planning firm on the planet. Yes, they charge hourly AND have a thriving, high-quality financial planning business.

I interviewed Mark with Adam Carolan from NextGen Planners and we listened intently as Mark busted myth after myth after myth about the hourly rate model (e.g. Clients won’t engage you for ongoing service, they’ll just call ad hoc to solve a problem – NOT TRUE)

You can check out the full interview here. And have a notepad ready. There’s a ton of fresh thinking in it.

Client experience:

I wrote in last year’s observations blog that the client experience was being taken up several levels.

This year at the Insiders Forum I listened to a fantastic keynote presentation from Julie Littlechild called, From Efficiency to Engagement: The Evolution of the Client Experience. Key takeaways included:

• Most firms are focused on efficiency rather than deep connection and engagement.
  
  Skilled advisers can often do the deep connection part in their meetings, but this is not reflected in the client experience across the rest of the firm.

• Efficiency is the first step in the creation of the client experience, not the last.

• Firms typically measure client satisfaction, client loyalty and the net promoter score, but these are not what we are aiming for.
  
  True engagement and differentiation occur when prospects and clients feel heard and understood (that’s the goal of your client experience).

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4. Latest Thinking from the US

I try to get to the US at least once a year because many of the future trends in financial planning start there. Here are three things that caught my attention:

a.) What I’ve noticed in my US visits this year was the discussion around the importance of organic growth. That is, most firms are only growing because of growth in investment markets and their AUM fees, or by acquisition.

The best firms in the US are really focused on making sure they measure their true underlying growth rate. Are they genuinely adding new clients and growing the firm? (Or not?)

b.) Alan Moore from XY Planning Network believes that adviser capacity will not increase in the next 10 years due to AI, it will simply allow advisers to do more for existing clients. This is an interesting view that is different to lots of other stuff I’m reading.

c.) And Angie Herbers (a US consultant) made the comment that a financial planning firm at its core is a financial therapist or behavioural coach because money is personal and emotional.

It reminded me of a comment I read about Jeff Bezos from Amazon.

He was asked “Jeff what’s going to change in the next 20 years?”

He replied, “That’s a great question, but a better question is ‘What’s not going to change in the next 20 years because you can build a business on that’.”

For me, Angie’s comment is that thing that won’t change. The emotions around money are where you can continue to add huge value to your clients. Make sure you and your team are continually upskilling in your coaching and questioning skills.

There’s a lot to look forward to next year for firms and founders willing to put in the time, thought and effort. If you need help, let us know.

See you in 2025 and enjoy your time off over the holiday season.

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