With the costs of industry levies and professional indemnity insurance rising at an astronomical rate, many independent owner-advisers feel threatened.
I get it. It’s scary.
But it’s also overcomable (is that a word?).
Independently owned firms provide the highest quality advice and the best customer care. They should be the dominant business model, not fighting for survival.
And you can be one of those dominant players if you focus on getting your business working right.There’s a great Tony Robbins quote that says, Business = Innovation + Marketing.
Are you working hard on both of these issues right now in your business?
And by innovation, I don’t mean creating the Facebook of financial planning. I mean:
- Are you listening to your clients?
- Are you tweaking and refining what you deliver to them?
- Is your service proposition meeting their needs?
- Are you looking at how you might price different services differently, for different target markets that you serve?
Or are you sitting there focused mainly on yourself?
Businesses exist to solve problems for specific groups of people.
Who do you serve?
And what problems do you solve for those people?
Should I align with a larger group or brand?
If you’re following my thinking so far, then you’ll realise that simply aligning yourself with a larger group of advisers who are not thinking about the questions I raised above, won’t save you.
Larger groups of advisers can go broke in one fell swoop too.
Please don’t get me wrong. I don’t mind if you operate as part of a network or larger collection of firms. If you feel that serves you in other ways (for example, lower PI costs) then go for it.
But don’t let that environment make your thinking lazy. You’re in control of your own future; no one else.
Don’t let regulation and costs drive you into the arms of an unsuitable home thinking it’s an easy way out or some sort of silver bullet. It’s not.
If you can master some business fundamentals (and you can), you will operate profitably and happily under your own control, feeling confident about your future.
What you need to do
When you start worrying about the future and everything that you have to deal with, it can feel overwhelming.
Let’s keep it simple. The key to survival is mastering three core skills:
- Technical knowledge (exams and qualifications)
- Selling and communication (so you can covert enough of the clients you meet)
- Business management
The truth is, as advisers, we get loads of support on points one and two, but almost none on point three.
Yet if you’re being objective, which one do you think will give you the greatest ability to be resilient, survive and thrive in the long-run?
Yeah, you’re business management skills.
And even if you tell yourself “I’m only running a lifestyle business” you’re going to need those business skills if you want to have any sort of lifestyle.
With the costs of Professional Indemnity (PI) insurance and industry levies rising dramatically year-on-year you are going to have to grow at a faster rate. The days of just ticking along at 5% pa growth are probably over.
If you are an independently owned firm that focuses on delivering outstanding advice to clients, you can grow faster than that. However, you need to master some fundamental skills and be able to build an effective team around you if you want to succeed.
What to work on then?
I know it feels like there are millions of issues you’re responsible for. And when you start listing every compliance issue one by one it might even be true. However, if you get the half a dozen inputs I’ve listed below working effectively in your business, you’ll find that most of those issues are dealt with in the normal course of business:
The Future Is Bright
I still believe that we haven’t seen the best of the financial planning business model yet, so if you’re running that model you’re in a great place.
Sure, you need to be thinking hard and keeping an eye on the profession’s direction of travel, but that’s part of the fun.
Advisers who will deal well with the future are those that are prepared to keep an open mind and keep responding to the changing needs of their clients. Clearly, that mindset has nothing to do with your age.
So keep thinking. Keep talking to your peers. Keep reading about innovations in other industries and professions as your inspiration.
That’s how you thrive in the 21st century.
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