Observations from 2022 - FP Advance

Observations from 2022

BY brett

What a year!

Covid no longer exists – if I use the behaviour of Londoners as my evidence. 

Donald Trump still exists – and may well be making a comeback; yay! (Just to be clear that’s a sarcastic yay)

And independently-owned financial planning firms still provide the highest quality advice on the planet.

Here’s what I’ve noticed during 2022:

1. The end of cheap money

With the re-discovery of inflation, global supply chain issues, the great resignation and the war in Ukraine, money is no longer cheap. 


All those VC and private equity firms investing in the financial services consolidation space might just be fiddling with their spreadsheets. 

Maybe they’ll work out that if they vertically integrate and load up the investment proposition this is still a great idea (for them, not their clients). 

It’s also possible that they start reconsidering their strategy. And as I alluded to in my recent White Paper, Are You Like A Needle In A Haystack, roll-up strategies typically don’t work. 

According to Investopedia:

“A roll-up merger is when an investor, such as a private equity firm, buys up companies in the same market and merges them together. combine multiple small companies into a larger entity that is better positioned to enjoy economies of scale.”

Jamming together 200 businesses that are ‘just ok’ in terms of structure and efficiency (small owner-operated firms) gives you a group that is ‘just ok’ in terms of structure and efficiency. Generating economies of scale from such a venture usually remains elusive. (Check out this article from Harvard Business Review, Seven Ways To Fail Big).

What does that mean if you’re the owner (or are planning to become the owner) of a financial planning firm?
Be very careful selling out to some of these players. They’ll be looking to extract the returns they want from their investment and you may find yourself the powerless victim in the process. #just sayin’.

2. The polarisation of advice

In a previous White Paper, What Next For Financial Planning In The UK, I looked at Clayton Christensen’s theory of disruptive innovation and specifically how disruption sneaks up on us. 

I can certainly see the seeds of disruption emerging. Remember, disruptors start with the un-served and low end of the market and work their way up (which is why we don’t see them coming). There are a ton of well-funded brands out there running experiments in those spaces. 

However, I read a couple of things recently that gave me renewed hope for the future.

Jeff Thull, author of Mastering The Complex Sale, believes that sales across all industries are polarising into efficient, technology-driven sales where a salesperson isn’t actually needed (think Amazon), while on the other side is what he calls the complex sale. Thull says that “the problems we’re solving for clients and the solutions we’re bringing to them are becoming more complex”. One could argue that holistic financial planning is a complex sale, whilst topping up an ISA or investing someone’s money is a task that requires efficiency.

Clearly, there are firms providing these different types of services but they all get lumped together as advisers, financial planners or wealth managers. 

David Maister, in his classic book, Managing The Professional Service Firm, describes three positionings for professional services firms; Expertise, Experience, and Efficiency. 

Expertise is the super high-end and technical space. Firms here are providing truly cutting-edge and innovative solutions to complex and varied client problems. My guess is only a handful of financial planning firms might choose this path. 

Experience is more about the experience of dealing with a particular type of client’s challenges over and over – let’s call it serving a niche or niches. The majority of financial planning firms could and should live happily here but most don’t – they’re still acting as generalists. 

Efficiency is for firms that serve people who have challenges that require less (not no) technical expertise and who are going to be more interested in value for money – hence the firm needs to be efficient to survive in that space. Some advisers serve these types of clients (less complex clients typically) but are not necessarily structured to be efficient firms. They are structured like the generalists with the same headcount and the same types of staff as those in the Experience space. This makes them far less profitable than they could be if they were more deliberate in how they structured their firm. 

I believe that the bland, undefined, generalist adviser space is getting more and more difficult to occupy. As Jeff Thull says, we’ll see more polarisation as advice firms choose to occupy either the Efficiency space or the Experience space. 

Which one are you best suited to?

How can you be more deliberate in embracing your preferred positioning?

3. The rise of the Practice Manager

Almost every business that comes through my Uncover Your Business Potential programme ends up hiring a Practice Manager. The ones that don’t hire one have already got one. 

I’ve blogged repeatedly about the reasons for this. The biggest one is that even if you want to stay small, and if you’re any good as an adviser, new clients keep getting referred to you. 

You can’t stop growth. 

You need to manage growth.

So hiring a Practice Manager (aka Ops Mgr, Office Mgr, General Mgr, MD etc) to take care of the ‘management stuff’ frees you up to focus on strategy, rainmaking, and seeing the biggest and best clients. 

I attended the Insider’s Forum conference run by Bob Veres, publisher of Inside Information in the US (you should all subscribe – and no, I’m not affiliated). The pre-conference session was organised by Shaun Kapusinski, founder of HIFON. Three amazing speakers, two operations managers and one now CEO spoke about their experiences and shared their knowledge. It was great.

My point being that good quality practice management is the new black. 

One more thing about practice management

One recent trend I’ve noticed is the arrival of the virtual practice manager. That’s someone who doesn’t come to your office but can deliver the service remotely, often part-time, which suits a lot of smaller firms. You can hire them for a day a week instead of full-time.

And before you ask, ‘yes’ it works perfectly well delivered virtually. 

At FP Advance we have our own virtual practice manager Michelle and she’s transformed our business. Someone in the financial planning space that provides this service is Lucy Byrom from Fusion Business Management.

If you’ve got your own Practice Manager, or you’re about to hire one then you should immediately join them up to the Master Practitioners Club run by Dominika Sieradzka-MacCuirc at RIE Solutions. It’s an amazing resource and community for operations types. There are regular live webinars, office hours calls to get queries answered, and a massive library of resources for your manager to draw on. 

The end…or is it the beginning?

It’s certainly the end of my blog, but perhaps it’s the beginning of the next amazing phase of your life and career as a financial planner. 

Keep growing, keep asking questions and see you in 2023 ready to give it hell.

“Challenges are what make life interesting and overcoming them is what makes life meaningful.”

Joshua J. Marine

Some Free Resources For You To Check Out

On my website I’ve got a ton of great free resources you can access to help you build your financial planning business. 

Click here to find them.

Uncover Your Business Potential

A transformational coaching programme for adviser-owners who want to create world-class financial planning businesses.

Want to love your business and fulfil your potential?

The challenges within businesses are complex and often ambiguous. If they weren’t you’d have solved them all by now.

My Uncover Your Business Potential programme teaches you the ‘how’. How to build a business that delivers amazing outcomes for your clients and that’s simple and enjoyable to run.

It’s not a 5 step process. There isn’t one.

It’s 3 years of digging in and solving each business challenge to finally create the business you’ve always envisaged.

I work with owner-advisers who strive to be great and are prepared to do the work.

Owner-advisers just like you.

If you think it’s time to take that next bold step, then let’s set up a call.

Other High Value Resources

If you’re looking for more comprehensive support on the fundamentals of creating a great financial planning business then check out my self-study coaching bundles.

Affordable answers to your most pressing business challenges.

Availability: Accessible online 24/7

Price: from £149

Learn how to:

  • Simplify your advice process
  • Unravel complexities created by compliance
  • Market your business effectively
  • Demonstrate your value clearly and simply
  • Price your service perfectly
  • Build your ideal support team
  • Plan and execute like a pro
  • Niche your business for faster growth
  • Delve into your financials and make better business decisions
Find out more

And…it’s a wrap for 2022! Keep growing, keep asking questions and see you in 2023 ready to give it hell.

Have you loved this week’s blog?  Really? Then do yourself a favour and sign up to receive it weekly. You’ll get it before anyone else and you can wave goodbye at any time (although I don’t think you’ll want to)

  • Hidden

0 comments to " Observations from 2022 "

Leave a Comment

Want to know the secret weapon that the best Financial Planners have in their arsenal?

Sign up and you’ll receive my weekly blog straight to your inbox. (You can unsubscribe any time; we won’t be offended, but I don’t think you’ll want to)

Subscribe to Newsletter and Next Level Freebie - Blog side bar (AC)

  • Hidden

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.