What Top Financial Planning Firms Did Right in 2017

I’ve never seen a year like it

The Financial Planning profession looks like it’s at another inflection point, and this one feels big. I’ll be looking at the changes I see ahead in more detail soon, but I’d like to look back at what an amazing year 2017 was for our profession.

Here’s what I’ve seen up close and personal in my work with some great advisory firms this year:

1. Sale and Succession

This is not your typical exploration of a bunch of old farts looking to sell. Not at all.

With an adviser population that has been over 50 for as long as I’ve been in the industry, it’s no surprise that lots of firms have been exploring their options regarding how to crystalise value from the asset they’ve created.

What has turned out to be a (pleasant) surprise, is how that has played out.

Several firms I’m working with have reached a place where they had to consider their selling options. They’re not quite ready to go, but it’s getting closer and the pre-work starts now.

However, after investigating what’s possible, almost all of them have, for now, decided to continue building their businesses. In effect choosing succession over sale. Their businesses are growing brilliantly, and they’ve all just come to the conclusion that it would be crazy to end that growth now. Why exit a business where all the hard work has been done?

Making this decision hasn’t closed any doors for them, and doesn’t mean that a sale can’t occur in the future if the succession thing doesn’t pan out. Even the buyers are interested to see what succession planning has been put in place within any firm they are considering purchasing, as it protects their investment and makes a purchase that much safer.

2. Professionalisation

Firms that have made it to £600k+ of turnover have been recruiting professional management to take over the day-to-day tasks that distract high-performing Financial Planning business owners from their core skill and love: seeing clients.

What is surprising is that firms below this level are also considering bringing in a practice manager much earlier, often at £250k – £350k of turnover, as business owners realise that trying to manage everything and be a good adviser is impossible to do well.

3. Team Building

It’s not easy finding and securing talent, but I’ve seen a step up from the profession this year. They’ve accepted that recruitment is a skill that can be improved, and have been getting better at it.

As a result of the sale/succession issue I covered earlier, good Financial Planning firms have been hiring new advisers for the first time in ages. It’s not that it’s never happened up until now, I know it has, but it’s been more usual for owner-operators to be setting up their own firms; keeping it to one or two partners who are the main advisers. Now, even these firms are starting to recruit for new advisors, but they are doing it right and smart.

Firms have also been hiring graduates and apprentices too, with some great success stories. Herbert Scott down in Lewes are on their fourth apprentice. Two of those have been superstars, and are now in full time employment on stellar career trajectories within the firm.

4. Mentoring the Next Generation

As a result of all these industry dynamics, the wealth of experience that has been accumulated the hard way, with scars to prove it, by experienced Financial Planners is now being passed onto a new generation of advisers, administrators and paraplanners.

This feels like a serious attempt at creating a legacy; ensuring that what we’ve all been part of creating is carried on well beyond the founders of each individual firm.

As a direct result of the team building and mentoring, I’ve never seen people having so much fun. The new people help the more experienced business leaders and advisers realise how much they’ve learned over the course of their careers.

It feels great to pass it on.

5. Defence Against the Robos

My last observation is that technology is going to radically alter the advisory landscape, probably by driving down fees for advice. That’s a massive threat, because most firms are not making enough genuine profit even at current margins.

However, the good-quality firms are also learning that the new technology might be able to help them do some lower value, but still important, jobs more easily, more efficiently and more cost effectively.

That leaves them to focus on what they really sell – relationship management. Asking great questions, reading the nonverbal signals in the responses, and coaching people to overcome their behavioural challenges still needs to be done by a human being. Great advisers have always majored in people skills, and the Robo threat is going to be neutralised for the top players by staying with that theme.

It’s All Good News

If you stay focused on doing things right, putting clients first, and managing your business professionally, there is a very bright future ahead. As we head into the next stage I hope you’re feeling the same way.

“The Financial Planning profession is at another inflection point and this one feels big.”