Observations from 2020 - FP Advance

Observations from 2020

BY brett

Where do I even start with my observations for 2020? What a year.

I’ve got seven major themes that I’ve written about this year that are all still relevant if you’re running a financial planning business in the UK.

1. Unbundling of advice

Bundled advice, which is what you’ve fought hard to sell as you built your financial planning business, means the client gets everything included for one fee; often the ongoing 1% of assets under management, or the big fat flat fee that you charge.

What I’m seeing in the marketplace is a move back to an unbundling of advice. That is, you can get some advice, but don’t necessarily have to become an ongoing client of the advice firm. It feels like the next big thing and it’s not even new.

Planning firms that are focusing on younger client segments are deliberately unbundling their advice. Why? Because that’s what younger clients want.

Check out The (Not So) New Trend if you want to know more.

2. Coronavirus

I can barely bring myself to write another word about Coronavirus, but hey, it’s been the big news of 2020.

Almost every financial planning firm I spoke to was largely unaffected by Coronavirus (yes, you read that correctly).

They moved their teams home quickly and continued to deliver business-as-usual. Hardly any furloughed staff. Many have even learned to secure brand new clients over Zoom, without ever meeting face to face. Their ongoing revenue often makes up 80%-90% of their total revenue, so they’ve held up well.

The businesses that were hit harder were older model firms who still rely on a lot of new business income. Pre-Covid their renewal income was maybe 50%-60% of their total revenue. When new business stopped for a few months, that put them under tremendous strain and they had to react quickly and dramatically. 

What it’s meant is that lots of good quality staff are actively looking around at more stable firms for their career future. This is a positive development for financial planning firms looking for new staff right now. It’s the best recruitment market I’ve seen in 10 years.

3. Communication

When Coronavirus hit and we went into lockdown in March it was a strange and scary time. I live in London and it was like a scene from a zombie apocalypse movie. There was no one around for months. 

Communication with clients was the number one strategy I recommended for all firms at this time. 

Yet communication with your clients is the number one marketing strategy I could recommend to any business at all times.

I wrote two important articles at the end of March in response to Corona. One for turning things around if you found things were tough, and one with ideas on how to increase and improve your communication to clients (which is as relevant today as it was back in March). Check out I Just Called To Say I Love You (and other marketing ideas for right now).

4. Non-intermediated advice

Another slightly polarising issue was Steve Conley’s Academy of Life Planning, which is all about offering non-intermediated advice. 

You’ll do everything except recommend a product for people at the end of your advice process so it’s non-regulated.  

It saves a fortune in Professional Indemnity premiums (which was another theme for 2020).

That’s a novel idea, I thought to myself. 

I got aggressive Twitter messages from a consumer advocate wondering if advisers would use this loophole to run around giving crappy advice. Needless to say, he wasn’t a fan of this idea. Although, he’s got a point. Some might. Regulation might need to catch up, I suspect.

Some advisers hated the idea too. Leaving clients to find their own product or investment solutions seemed like a dereliction of duty to them. 

And some advisers loved it. No more PI hassle and compliance bollocks. 

Check out Advice Without Compliance? It Exists for more information on how it works and make up your mind.

5. Racism

The killing of George Floyd in the US unleashed a wave of protest around the world. Like you, I was horrified to watch the video of a policeman with his knee on George’s neck for 8 or 9 minutes, eventually killing him. 

It’s not the first time we’ve seen this occur in the US. 

But racism isn’t restricted to the US. It occurs all over the world, including here in Britain and my place of birth, Australia.

I’ve come to realise that being neutral about racism in our society makes me complicit in perpetuating it. 

I won’t do that any longer. For me, this is not a political issue, it’s a simple issue of right and wrong. I’m trying to unwind a lifetime of ignorance by reading more widely and trying to listen to people who have been affected by racism.

6. Succession

Is it just me or is every man, woman and child who owns a financial services business looking to sell right now?

Consolidation of advice businesses has been happening for years so it’s not really news, but maybe the ageing demographics of the industry/profession are finally coming home to roost.

However, selling is not a walk in the park. Many good financial planning firms are opting to try and create internal successors to provide a more client-friendly continuity plan. Although let’s be honest, that’s not easy either. 

I wrote two articles on succession this year that resonated with people. 

The first was called Letter To A New Generation, a fictitious letter from an older business owner to their successor.

The second was called Inside The Successors Mind, a fictitious letter in response to the business owner from their chosen successor.

If succession is an issue for you, then I highly recommend a read of these two “letters” (No one sends letters anymore. What was I thinking?)

7. Fragmentation of advice

Financial planning in the last 16 years has really meant retirement planning for the top 5% – 10% of the population. It’s been great for boutique firms that have been gravitating higher and higher up the wealth food chain. 

However, there’s change afoot. I’m meeting with more and more advisers and businesses that are moving into new advice areas, trying to serve:

  • People who earn less
  • People who have less to invest
  • Younger people (in their 20s or 30s)
  • Accumulation clients (in their 30s or 40s)
  • People who only want advice (they’ll DIY the investments and product selection)

To do that, these businesses are also looking at smaller niche markets within those groups. 

This is a good thing.

Rather than all financial planning firms saying they deal with the at-retirement market, we’re seeing offerings that speak to smaller and smaller subsets of people requiring advice. 

They’re trying new approaches to charging, like subscription or membership models. Or blending different charging models to accommodate the specific needs of different clients’ circumstances.

This is a natural part of the maturation of our profession. Clients should have a choice about where to get advice. There should be firms that specialise in the needs of particular groups of people and they should be “findable” easily in a Google search. 

You can read more about that here in The Fragmentation Of the Advice Market.

What about you?

That’s a heck of a year in anyone’s language, don’t you think?

What’s happened to you and your business in 2020? Have you survived? Thrived? Or considered packing it in?

Drop me a note to [email protected]. I’d love to hear about your experience. 

And what’s your biggest challenge as you head into 2021? You can tell me about that, too. Maybe I’ll write a blog about it next year. 

All the best.

Some Free Webinars For You To Check Out

Did you know I’ve done a bunch of free webinars throughout 2020 for the Personal Finance Society?
Well I did. 
They’re all still watchable for free, anytime you like (although they may not stay up there forever, so get watching if a topic grabs your interest).

Here’s what’s available:

1. Are You Building A Business Or Creating A Lifestyle?
Are you really building a business? Or are you creating a lifestyle for you and your family? Sometimes this feels like the million-dollar question. There’s no right or wrong answer, but you absolutely must know which one you’re trying to create. Failing to decide feels like standing on a cracked iceberg, with your feet slowly moving in different directions. At some point, you’re going to have to choose which way you’re going and commit.

2. Fees, Value & Profit: Getting The Balance Right
How much should you charge for your work? Well, it depends on how well you understand and communicate your value. Get those two things in balance and the profits should take care of themselves.

3. Execution Excellence: The Key To Business Success
Managing your business effectively comes down to one core skill – can you execute? You can have all the ideas you want, but if you can’t make them happen you’re toast.

4. Future Proof Your Client Review Service (MOST POPULAR)
Most advisers spend most of their time delivering annual reviews to existing clients. If you want to generate more referrals from those review meetings, then they better be good and they better add value. The truth is, there are only two things you need to do at an annual review meeting to blow your client’s mind.

5. The Power In Your Purpose
When you know your purpose and have a plan to get there, you can walk through brick walls to bring your vision to life. But if you lose your ‘reason why’, it can be hard to drag yourself out of bed every day. If you’re looking for an injection of enthusiasm right now, then this is a webinar for you. Rediscover your mojo and light a rocket under your business.

6. Turnaround Your Business: A 5 Point Plan For Getting Things Back On Track
I created this when Coronavirus first hit and some firms were in trouble. However, it’s great information for anytime you feel your business needs a turnaround plan. 

Get Watching

If Christmas television starts to wear you down, watch me instead.
Go on. Take a look. There’s so much great information there for you. 

Almost every financial planning firm I spoke to was largely unaffected by Coronavirus (yes, you read that correctly).

Every day’s a school day, isn’t it?  (Minus the compulsory short trousers, of course) If you want to benefit from the sort of advice that comes from knowing the Financial Planning industry inside-out and from working with most of the UK’s top Financial Planning firms, then sign up to my weekly blog.  It’s free. It’s the ONLY blog the top financial planners read every week and it’s here, for you. You can say “See-ya” at any time, but I don’t think you’ll want to.

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ABOUT BRETT DAVIDSON When you work with FP Advance you work with me, Brett Davidson, directly. My motto is ‘advise better, live better’ and I practice what I preach. I’m straight talking and get to the heart of an issue quickly. There’s no beating about the bush, just a focus on helping things improve. Ask my clients – what I teach works.