How To Solve The Scale Problem (In Financial Planning businesses) - FP Advance

How To Solve The Scale Problem (In Financial Planning businesses)



If you were going to refer a friend or relative to another financial planning firm (not yours), who would you send them to?

I’m guessing you’re not going to refer them to a big, branded player. It’s much more likely to be another independently owned firm.


Because we know that the best financial planning firms in the country are still independently owned and managed.

So why do the bigger branded players control the lion’s share of the advice marketplace?

It makes no sense and it’s time we called out the issue.

Financial planning delivered by independently owned firms is the killer service in the market.

So why aren’t we making a bigger impact?

Can and should we scale up to deliver our quality of service to more people?


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PART ONE: The Problem

Our Impact

Financial planners love helping people. It’s what drives all of us.

So why are we keeping ourselves small and hidden?

If we want to make an impact, independently owned financial planning firms need to reach more people.

Serving 100 clients each is not going to change the world I’m afraid. It’s valuable and we’re all doing our best to make a difference, I’m not deriding that. However, if you can serve 100 clients well, why can’t you serve 200? And if you can serve 200, why can’t you serve 500? And if you can serve 500 why not 1000? Or 10,000?

Can you see that as you reach each new milestone it becomes ‘believable’ that you could reach the next one? And why shouldn’t you?

When you started with no clients whatsoever, serving the quality and number of clients you serve today sounded crazy.

If we want to make an impact, independently owned financial planning firms need to reach more people.


The Challenge

I realise that saying, “we need to reach more people” is easy. The real challenge is in ‘how’ to make it happen as a profession.

And that’s why I’ve written this white paper.

In some of my blogs I’ve written about the idea of ‘scaling’ financial planning businesses.

But I’m not going to use ‘scaling’ as my descriptor in this white paper. The owners of financial planning firms don’t usually think of themselves as trying to ‘scale’. I just feel like it’s got a lot of baggage attached to it as a word.

When you think of scaling a business you probably think of what a good friend of mine refers to as “the lobotomised MBA version” of scaling, where they talk about becoming the dominant player in the industry or sector because the dominant player has the lowest costs and takes market share from everyone else.

I’m not going down that path. That business-school worldview feels well past its used-by date.

For the purposes of this white paper, let’s redefine what others might call ‘scaling’ as, ‘working out how to help more people’. That, I can get excited about.

To be helping more people you’ve got to have a business model that actually helps people.


If you’re an independently owned financial planning business, you’ve got a high probability of your business model fitting that description.

However, if you run a vertically integrated firm (where the funds management arm at the top drives the value of the business) then I’m going to argue that you probably don’t.

And the consolidation model of buying a bunch of smaller firms and calling them a scaled business is total nonsense.

In this white paper I’m going to:

Start with why I think growing your existing financial planning business is a good idea – in fact, you may not have a choice in the matter.

Outline why many firm owners are convinced that scaling (or helping more people) is a really bad idea for them even though they believe it’s a good idea for the profession as a whole.

Look at the current approach to growing a financial planning firm.

Offer an alternative approach to growth that can help you build a fun, thriving and sustainable business, more quickly and more easily.

Describe the key steps in executing the idea (high level, not micro).

Explain the benefits of this new approach.

If you are interested in how we might grow your financial planning firm to help more people and make a bigger impact in the world, then read on.

The Growth Conundrum For Adviser-Owners (or why you think you don’t want growth)

The only certainties in life? Death and taxes.

The three certainties if you run your own financial planning business?

You will attract more clients

You will need to manage continual growth (even if you don’t want to)

You will be the handbrake in your own business

Lest you sit there and think these things don’t apply to you, let me explain why they absolutely do (or will) apply to you as your business matures.

Let’s take them one by one.

Certainty Number 1: You will attract more clients

If you’ve been in business for a while you’ll understand this one.

When you go out on your own and start running your financial planning business, goal number one is simply to survive. At this stage, you spend an awful lot of time and energy trying to find enough prospects and convincing them that they should become clients.

Attracting more clients is why you exist in the early years.

But here’s what happens next.

At some point on your journey, you get busy. Really busy. ‘At-maximum-capacity’ style busy. You’re under pressure, your personal life is under pressure and your team is under pressure.

Now you face some difficult strategic choices:

Say ‘no’ to new business

Grow your team (thereby increasing capacity)

Let go of some smaller clients

Saying ‘no’ to new business is a total fantasy. Sure, you can say no to smaller leads and increase your minimums, but when that next perfect, ideal client arrives, are you really going to say ‘no’?

Of course not.

You’ve worked for 10, 20 or 30 years in some cases to put yourself in the position to attract those sorts of leads. Saying ‘no’ is not an option.

But when you say ‘yes’ you just put yourself and your team under more pressure.

Growing your team is the next possible choice and if you’re trying that right now, I don’t need to explain that it’s not easy.

Letting go of smaller clients makes logical sense, but it’s fraught with moral and emotional challenges for most of us because we’re nice people.

Let me be clear, there are no easy options here.

Certainty Number 2: You will need to manage continual growth (even if you don’t want to)

If you don’t like the idea of having to say ‘no’ to new leads then you will need to keep growing your support team.

“I don’t want more people to manage,” I hear you say.

Yes, that’s why I call it the growth conundrum.

Good financial planners love giving good financial planning advice, it’s their mission in life.

Yet if you want to keep doing that and not get totally overrun with administration and compliance headaches you need to build a team that will do the “stuff” that goes hand-in-hand with giving advice. No one achieves anything in this life alone.

By the time you reach £1M of annual revenue, you should already have a Practice Manager in place (aka, Managing Director, Operations Manager, Operations Director) so you can stay focused on your core strength which is attracting and retaining great clients. To be honest, any firm with an ambition to grow should probably have a Practice Manager in place at £500,000 of annual revenue.

A happy team leads to happy clients, which leads to happy shareholders. It doesn’t work very well in any other order in my opinion.

Running a great business is all about the people you have in it. Great people are attracted to great cultures and great opportunities to grow and develop themselves.

Certainty Number 3: You will be the handbrake in your business

Here’s an awful truth:

Whatever the problem is in your business, it’s your fault.

OMG, I hate this one. “Please let it be anyone’s fault but mine,” I say to myself regularly.

Here’s the thing. If you’re the owner of a business you have to be growing and developing you first and foremost.

As you grow and develop you’ll come to realise that when you get yourself in-flow, your organisation will get in-flow behind you. I first heard that idea expressed by Angie Herbers, the US-based consultant and it’s true.

What to do?

When you hear all of this it might be making you feel slightly ill. I get it, it sounds like a lot to work on.

But if you refer back to certainty number 1, “You will attract more clients”, do you really have a choice?

Clients are going to keep coming because you’ve worked your whole career to make that happen. Don’t make rash strategic choices just because you’re feeling the pressure.

You can build a great financial planning business that runs like clockwork.

Understand the size of the task, choose an acceptable time frame and chip away step by step.

Progress, not perfection.

You shouldn’t be trying to stop growth, you should be learning how to manage it.

Won’t growing a larger business destroy your lifestyle?

There are a bunch of limiting beliefs that most adviser-owners hold about growing their business.

Limiting Belief 1: “If I grow my business I’ll have no life.”

The thinking goes, “If it hurts this much generating [insert your current level of annual revenue here] then generating 2x, 3x or 10x our current revenue will hurt 2x, 3x, or 10x more and I’ll die.”

If that’s your belief then of course it makes no sense to want to grow your business and help more people.

But what if it’s not true?

Let’s be honest, running a business takes work at any level. Staying small is hard too.

What if more revenue, more staff, more professional management, better technology and more budget for everything meant you could deliver a killer world-class service?

What if all of those things allowed you to focus on your own strengths while other skilled and capable people focused on theirs in areas you find frustrating or difficult? Now your work can become fresh and new and exciting again.

Lots of advisers I speak to are torn by this dilemma.

On the one hand, they know their business is primed to become something bigger and better. While on the other, they don’t want to throw away the current lifestyle they’ve been able to build for themselves.

On Monday you’re thinking about all the new clients being referred and how this could translate into significant growth. And on Tuesday you worry about whether that might mean working 14-hour days and taking less time off.

These two competing internal goals can create feelings of confusion and frustration and generate years of paralysis.

There is a way forward.

I call them the unwritten rules of the game.


The Unwritten Rules

These rules are unwritten because to my mind they go without saying. Although I’ve realised from my conversations with adviser-owners that they’re not always seeing things the same way that I am.

So let me spell out my unwritten rules of the game:

I’m only going to work normal business hours – 9:00 am – 5:00 pm. No nights and no weekends.

I’m going to take 10 weeks off every year.

It has to be fun. If it’s not fun and enjoyable, I don’t want to do it.

I want to be stretched. Without personal growth, there’s no deep fulfilment.

I want to focus on the jobs that I love and am good at – what Dan Sullivan, founder and president of Strategic Coach might call my unique ability. Everything else I’m going to try to get rid of (i.e. delegate)

Most adviser-owners I know will have something similar in their minds when challenged.

What are your unwritten rules of the game?

You might have a different set.

For example, you might be happy with only 6 weeks off per year, or alternatively, you might want 13. It’s your call.

Having established your unwritten rules, you can now let your ambition run wild and set some goals for business growth. You can do that and still feel safe because the unwritten rules trump everything. Your lifestyle isn’t going to suffer if you set yourself a Big Hairy Audacious Goal (BHAG), because it goes without saying that you have to achieve it whilst sticking to your unwritten rules of the game.

You set the parameters against which you can grow the business.

For example, you might want to triple your revenue and profitability over the next 10 years. However, you will have to do it without the unwritten rules being violated in any way.

You can grow within whatever boundaries you set for yourself.

No matter what happens, the unwritten rules are inviolable. If you can only achieve your business objectives by destroying your life in some way then you’ll just let the business goals go.

Great financial planners are helping their clients to live their best lives. For financial planners to do that with credibility they have to be trying to live their own best life too and not become overrun with work commitments

Limits increase creativity

Business owners who work all the hours under the sun end up doing themselves no favours.

They use extra working hours to avoid solving the underlying issues and challenges in their business. It’s easier to be busy than creative.

Business owners who set and embrace limits are forced to be creative if they want to achieve their goals. They find ways to get more with less.

Business is an exercise in creativity. And yes, it will stretch and challenge you. As Henry Ford said, “Thinking is the hardest work there is.”

It’s OK to dream big

Once you get clear on your own set of unwritten rules you can start dreaming big when it comes to your business.

When you know what your rules of the game are, you can do that safely without worrying about creating a seven-headed beast of a business, getting divorced, or never seeing your kids.


Limiting Belief 2: “If I ‘scale’ good advice, I’ll lose the quality.”

Says who?

This is not a risk, it’s a choice.

I was speaking with a consulting colleague who shared a concept he’d heard while listening to a podcast interview with Steven Wilkinson of Good & Prosper Limited. I’m paraphrasing, but the concept was this:

The idea that sits at the centre of your business is very, very important.

When push comes to shove, all other actions and ideas in your business will return to the most important idea that sits at the centre. It’s inevitable.

For example, if the idea at the centre of your business is to “maximise return on capital” (refer to “the lobotomised MBA version” of ‘scaling’ that I mentioned earlier in this white paper), then all your business decisions will be around how to increase that return year on year. And as Wilkinson points out, money and capital can scale endlessly, so you’ll always be chasing ‘more’. Not only is that sometimes bad for business owners and their companies, but it can also be bad for society too (think “too big to fail” businesses, or the environmental side-effects created when we only focus on ‘more’).

However, let’s say that the idea at the centre of your business is to “provide the best possible advice” or “outstanding customer service” or “do good for the community that we serve”. Then, all your business decisions will be around how to do that more effectively. That decision also implies that whilst you may be looking to help more people, your growth will need to be managed very differently from a business that has “maximise return on capital” at its centre. You might even pause growth from time to time to ensure that quality remains high.

So make a choice to help more people without losing the quality as you grow. Keep it amazing.

If that’s your goal (and it’s a good one) it might take longer. It might be more difficult. But it might also be more rewarding because it keeps you true to your own business and personal values. Great financial planners are not typically motivated by money – they just want to do things right.

Make it your life’s work. Build a 100-year business. Establish successors who buy into the mission and let it continue after you call it a day.

With the right team in place, you can still have time for an amazing life outside of work. The mix of work and play is always up to you.

And by the way, if you are building this type of business, you might just find you don’t want to retire in the conventional sense at 60 or 65 years of age.

When you’re on a mission to change the world, life is a whole lot more exciting.

You might also find that your business is worth a lot of money too (even though it was never the driver).


Limiting Belief 3: “I’ve only got another 5 years and then I’m out.”

When I hear that, the thought that immediately goes through my mind is:

“So make them count.”

If you believe you have a shorter window of time I want you to think about what you’re going to do with yourself in that window. Coasting will bore you to tears, and it won’t be good for your staff or your clients.

3 years, 5 years, or 10 years is an eternity if you’re focused.

Do you want to be great?

Do you want to go out with a bang instead of a whimper?

You don’t have to bet the farm, but you do have to have a vision and get after it; otherwise, life is deadly dull.

So, what would need to occur for your business to take that next step up?

You can just play golf for the rest of your life, or you can make a difference – to your clients, your staff and yourself.

Which one sounds more exciting?

And to be honest, you can change the world and still play golf, it’s not an either/or choice. Especially if you’ve set your own boundaries and unwritten rules as I suggested earlier.

Enough already. It’s time to change the dynamics of our profession.

What’s Getting In Your Way?

As I said in my opening arguments, to make an impact, independent advisers running a financial planning business model need to reach more people. To do that means growing your current business.

The question to ask is, “How can I grow my existing offering, whilst retaining my personal, high-quality service?”

And equally importantly, “How can I do that and retain a healthy work-life balance?”

When you start to answer these types of questions it can feel a little intimidating and our limiting beliefs (that I covered earlier) start to surface.

The truth is, as you grow in a business you’re always doing things you’ve never done before. You don’t have to have the answers to grow and help more people, you simply need to ask yourself the right questions. The solutions can be found.

You probably didn’t know exactly how things would work out when you were a start-up, but you got there in the end.

In my opinion, the challenge for our profession is about vision. Do you have, or could you create, a greater vision for the good that you could do out in the world?

What would happen if independently owned firms were able to grow and dominated the marketplace? How much better off would society be?

Role models

Lest you believe that only very large players can have a major impact in this world, I want to draw your attention to a book that’s worth reading, Small Giants: Companies That Choose to Be Great Instead of Big by Bo Burlingham. Be sure to buy the 10th-anniversary edition as it covers the 2008 credit crunch and how some of the small giants survived this period.

The businesses Burlingham writes about chose to retain a focus on quality and their core market, instead of growing because they could. It’s not only inspirational but provides a range of ways this can be done in different businesses. I loved it.

And interestingly, Germany has more small and mid-sized world-leading companies than any other major country, but it’s not a small economy.

PART TWO: The Big Idea

Here We Go

As I’ve worked with the owners of financial planning businesses I’ve always been interested in two key issues:

How to help them grow, whilst retaining an absolute focus on client service which all financial planners care greatly about; and

How to grow whilst maintaining a healthy work-life balance.

The ideas I’m sharing with you in this white paper are presented with these two issues front of mind. They are not for workaholics who never want to see their families.

How Do You Grow A Financial Planning Business? (Current Thinking)

The old-school growth model says that you should hire a new adviser and let them build their book of business.

So each new adviser starts with very few clients and has to go out and prospect for each one. Maybe you throw them a bone occasionally by giving them a lead that the existing business generated.

They’re typically paid on some variation of the following formula:

Basic Salary say £40,000

Plus a 35% split of all revenue generated above £120,000 (qualifying earnings of 3x basic salary)

So to start earning even remotely decent money they’ve got to build at least £200,000 in annual revenues.

Here are some productivity metrics that I see across the profession:

Bog standard financial advisers (often in a network environment) generate £100,000 – £200,000 of revenue (that’s up-front and recurring revenue).

Good advisers who’ve been around a while might generate £300,000 – £400,000 of annual revenue.

And high-performing advisers generate £500,000 – £600,000 of annual revenue. 

How long does it take most advisers to build a book of business that rivals yours at £500,000 or £600,000 of annual revenue?

Oh, only about 10 years (or never).

As you might have gathered, I’m not a fan of that approach.

Rarely does anyone stay for 10 years to succeed in this scenario.


Because both the owner of the business and the adviser themselves become so frustrated.

The owner sees very slow progress and starts making comments like, “You’re not performing.”

The up-and-coming adviser is constantly trying to find ways to earn more money. So they want a higher split of revenue, or if the owner tries to lower the split of revenue they fight tooth and nail to keep it where it is.

And if the owner ever talks about disengaging from smaller clients (which is often a great idea), good luck with getting an adviser who is trying to build a book of business to let even one client go, no matter how minuscule the revenue that client generates. It’s just not going to happen because in their mind you’re asking them to take a pay cut.

The seemingly obvious solution to hiring advisers that are growing a book of business is to hire advisers who already have a book of business.

I say it’s ‘seemingly’ obvious because anyone who’s tried this approach will know it has some shortcomings. I won’t spend ages on this but here are a few of them:

Mature advisers with an existing book of business come with their own way of doing things, which means they won’t be very open to doing things the way you want and need them to be done in your business. They’ll say they are open to change, but in 99.9% of cases, they’re not.

They’ll also want to be paid a significant percentage split of the revenue they are bringing into your business and who can blame them? However, if that split is higher than 40% of revenue it’s not workable for you.

They’ll consider their clients, their clients. So while your revenue numbers will go up, what do you really own?

Advisers who have grown up in the ‘eat-what-you-kill’ old-school sales model are typically individualists, not team players. You can’t have people who are not team players inside a culture that is all about team.

So what works better?

The alternative approach that works far better is for the existing owner to take say the bottom ⅔ or ¾ of their client bank and hand the whole lot across to a good quality newer adviser who will ‘service’ the existing clients and associated revenue stream.

That might mean the adviser-owner hands over £400,000 of revenue to the up-and-coming adviser. The owner themselves might retain the very top client relationships and the £200,000 of revenue associated with them because those clients require his/her level of experience. It might also keep the owner personally fulfilled by doing work they enjoy and in touch with clients directly.

This is 180 degrees the opposite of what most firms do because they are following the old-school growth model (unwittingly in 99% of cases).

It goes without saying that the up-and-coming adviser needs to have enough skills and experience to be able to handle the clients they are being given. However, the skill threshold necessary to be a good ‘servicer’ of existing client relationships is way lower than to be a converter of prospects into clients.

What are the benefits of this approach?

a./ The owner is now free to see more of the best quality leads that arrive at the firm.

If owners don’t follow this approach they end up stuck, servicing a full client load and with almost no space to meet with new prospective clients. So in a lot of cases, high-quality leads are being passed to the less-experienced advisers and the closing rate is way too low.

It makes sense that the best new leads should be seen by the best advisers in the firm.

b./ The up-and-coming adviser can be put on a salary (not variable remuneration) that shows them respect for the skills and responsibilities they will now assume.

No more of the ‘£40,000-plus-35%-after-achieving-qualifying- earnings’ remuneration model. That type of variable remuneration often sees less experienced advisers bringing in clients well below the target threshold the firm is geared up to serve.

It also creates individualistic behaviour.

In a modern financial planning business we want a team approach where the clients are at the centre of the business and everyone on the team is focused on delivering for them.

How much do you need to pay an adviser to whom you’ve given £400,000 of recurring revenue?

The answer is not a percentage. It’s a salary.

Depending on their experience and skills and your location, you might pay them a salary of £60,000, £70,000, £80,000 or £100,000.

This approach provides a ton of benefits for all parties:

The adviser is now over the moon at earning some proper money and they feel seen and valued within the business.

As the owner of the business, you’re over the moon because your ‘effective’ pay-away is now far lower than under most variable remuneration schemes. Even at the £100,000 salary level, your pay-away is only 25% of revenue, not 35%.

Now your less experienced adviser is instantly productive; there’s no 10-year wait.

Now you are free to ‘CEO’ more and to see the best new leads when they arrive.

Your gross margins increase, giving you more room to hire support staff and a professional Operations Manager.

Your client service quality stays high because you’ve got a fully staffed team and your net profit margins can still be at 25% after everyone (including you) gets paid a full market rate for their day job.

Finally, it helps you banish variable remuneration from your firm. If you do want to have a bonus scheme, something focused on the profitability of the overall business might work better. Although I’d warn you to think very hard before you go down that road, as most incentive or bonus schemes that I see, no matter how well-intentioned, just create unintended consequences. They rarely motivate anyone to perform at a higher level (which supposedly is their aim).

At the end of this paper, I’ve linked to a TED talk by Dan Pink on what really motivates people. Check it out once you’ve finished reading.


That’s the current approach in a nutshell

So there’s the current approach to growing your financial planning firm.

However, eventually, you get to a size where this model doesn’t allow you to grow as fast as you might like, or as fast as your lead flow is dictating. That can be as early as £1M of annual revenues within your firm.

Additionally, if each adviser can only manage around £600,000 of revenue (give or take), and they all require a similar-sized support team to do so, we run into the problem that David Maister explains so well in his book Managing The Professional Service Firm; that per partner (or per adviser) profits don’t increase as a professional services firm grows.

Is the ‘adviser-responsible-for-revenue’ business model in financial planning subject to the same restrictions? That is, there’s no scaling leverage or economies of scale.

Is there a way to change this equation?

A Subversive Idea

The idea I’m about to outline is based on a book called The Machine: A Radical Approach to the Design of the Sales Function by Justin Roff-Marsh, as well as a couple of webinars I’ve seen him present.

I’m going to paraphrase and outline what I’ve taken from Roff-Marsh’s work and apply it to financial planning. I’m not passing off these ideas as my own, nor am I implying that Roff-Marsh would agree with my interpretation, it’s just my take on things.


Idea 1: Revenue is the responsibility of sales

In the financial planning profession, I think you’d be hard-pressed to find anyone who disagrees with this assertion that revenue is the responsibility of sales. That is, it’s the advisers who are responsible for revenue.

But is it true?

Consider where revenue comes from for your financial planning business. Something like 80% or 90% of revenue is recurring. It rolls in year after year. Only 10% or 20% of annual revenue in mature financial planning firms is from new clients. In fact, it might not even be that high. A large portion of most new income is top-ups from existing clients who are adding to their portfolios.

And if you do lose a client (which is exceedingly rare in most firms I work with), what’s the reason? (I’m excluding death).

Roff-Marsh outlines three reasons clients typically leave any business (he’s not focused on financial planning in his work, but I believe it applies equally):

On-time delivery performance



On-time delivery in a financial planning business can be delayed by poor back-office turnaround times or by sloppy adviser delivery (e.g. delays in returning calls or responding to emails).

Price dissatisfaction in financial planning firms is often only raised due to general dissatisfaction with delivery (point 1). It’s very unusual to hear of clients leaving because of the price. They might if you drop the ball on service, but otherwise, it’s not a major factor in losing clients.

And in modern financial planning firms, clients leaving over product dissatisfaction is also rare. As financial planning has matured the scope for product dissatisfaction has reduced to a negligible level.

The conclusion from this quick analysis?

Failure to provide on-time delivery is the root cause of most client servicing issues in a financial planning firm and 80% or more of revenue comes from existing clients.

Therefore, sales should not be responsible for revenue.

I told you it was subversive.


Idea 2: Sales opportunities are scarce

Do you work in a financial planning business where there are more than enough leads coming in?

Lots of people reading this white paper will be in that situation. Many firms I know have raised their minimum client level, or their minimum fee level, have a waiting list, or are actually saying ‘no’ to new business (at least for a while), so their capacity can catch up to lead flow. I realise not all firms are in that situation, but it’s certainly not rare.

Here are two more assertions:

True salespeople are good at communication and persuasion (i.e. their conversion rate is high), otherwise, they shouldn’t be in a sales role.

Great financial planners are salespeople for the purposes of this discussion, even if we agree that they are selling ethically.

Your competitor’s clients are all targets for moving across to you and your service.

When I think about your competitors, I’m not necessarily thinking about other independently owned financial planning businesses, I’m thinking of the big wealth management brands.

If you look at this list of the top 10 wealth managers in the UK* you’ll notice that none of your small local competitor’s names are on there:

List of Top 10 UK Wealth Managers. 1. St James’s Place Wealth Management, 2. Standard Life Aberdeen, 3. Schroders Wealth Management, 4. Rathbones, 5. Brewin Dolphin, 6. LGT Vestra, 7. Coutts, 8. UBS, 9. HSBC Private Bank, 10. BMO Global Asset Management
* I sourced this list from a quick online search. There are various lists one could select often showing a different top 10, although St James Place is usually at the top. My point stands, that it is loaded with big brands, not independent financial planning firms.


I’m assuming that at least some portion of the clients with these bigger brands would be happy to do business with you if they knew of you and had the opportunity to learn more about your service.

The conclusion from this further analysis?

Sales opportunities are not scarce.

Sales opportunities are boundless.

What Are The Ramifications?

If we follow the logic in these two ideas, that sales should not be responsible for revenue and that sales opportunities are boundless, then we can turn current industry thinking on its head and say that revenue is the responsibility of operations, not sales.

For any advisers reading this, I’m not in any way shape or form predicting the end of great advisers. Not at all.

What I am going to outline is another way for financial planning businesses to be structured so that we can help more people (scale). Advisers are obviously central to providing that service in this new structure.


Operations – A New Focus

In this new way of thinking, Operations become responsible for the incremental growth of revenue.

The operations team in this new approach consist of current back office support staff (administrators and paraplanners) as well as what I’ll call servicing advisers. That is, advisers who service an existing book of business.

Operations help clients to do more business with the firm by providing a frictionless ongoing service, engaging deeply with existing clients and spotting new opportunities.

Ideas for restructuring operations

Roff-Marsh recommends setting up one customer service team working together in one location, consisting of generalists; the team members who can handle incoming general queries from existing clients. They are not split by geography or product line.

This tier 1 team is responsible for:

Administration and processing

Lead generation (when a client raises an issue)

Resolving simple admin issues for clients

He also suggests that you optimise for velocity – have a lot of these people to give you speed of response. This helps generate ongoing work and referred work because it’s quick and easy to do business with you.

(Authors Note: In 5% of cases every year, there might be major changes to a client’s situation. Maybe they got divorced, lost their job, or sold a business for £20M. In that situation, depending on the complexity of the new advice that is required, either the servicing adviser handles it as part of their role, OR the client gets attended to by a new business adviser AND the servicing adviser while the new advice is created and presented).

In summary…

If operations is 100% responsible for these activities, then everyone else on the team is 0% responsible.

This frees up other members of the team to do other high-value activities.


Sales – A New Focus

Sales is now responsible for new business – and that’s it.

The sales team in this approach consists of a small team of the most skilled advisers at converting new prospects into ongoing clients. That might be only 1, 2 or 3 advisers, even in firms up to £3M of revenue (see next point for further explanation).

Ideas for restructuring sales

Salespeople no longer ‘own’ client relationships or accounts. Once a client is secured (which may take the selling advisers weeks or months), they would be handed over to the operations and servicing team immediately.

This would allow the selling advisers to have a lot more selling conversations.

One adviser-owner I was speaking with about this idea, put it this way:

“If all I did was hold meetings to secure new clients, which might mean I have two meeting slots set aside on Tuesday, Wednesday and Thursday, a morning and an afternoon slot, and if securing a new client takes say four meetings, and I work for 46 weeks per year, then as a single adviser I have room to secure 69 new clients per year. We’ve probably not secured 69 new clients in the last 5 years with two of us supposedly focused on sales.”

Under this new structure, ALL customer service tasks should be removed from the salespeople.

Salespeople should ideally operate INSIDE, not travelling around. That means new clients come to see the adviser in an office (you could still have offices in multiple locations in this scenario) or over Zoom.

Roff-Marsh goes further and says there should be no piece-rate pay for sales – no commissions or variable remuneration. It should all be about team-based results and remuneration. We want the salespeople to be team players. They must be aligned with the team goals, not individual goals.

In their excellent book, Scaling Up Compensation: 5 Design Principles for Turning Your Largest Expense Into a Strategic Advantage, Sebastian Ross and Verne Harnish state that incentive-based remuneration works best when the following 8 conditions are met:

The role is repetitive and focuses on doing just one thing

The goals are unambiguous and one-dimensional

It is easy to measure both the quantity and quality of results

The employee has complete end-to-end control of process and outcome

Cheating or gaming the results are practically impossible

The role is very independent i.e. there is little or no need for teamwork or collaboration

The employee is not expected to help or support others

The employee considers the incentive as meaningful and the payout happens frequently

In my opinion, a high-quality engagement process with new prospective clients doesn’t meet these 8 criteria. So I’m leaning toward Roff-Marsh’s view. My feeling is that incentives tend to create individualistic behaviour and probably don’t align with the team-based, client-centric culture that modern financial planning firms are trying to create.


Marketing – A New Focus

If the operations team is responsible for administration and processing, lead generation (when a client raises an issue), resolving simple admin issues for clients and conducting all client reviews, and if each adviser on the sales team can see 69 new clients per year (in 3 days per week), then the job of Marketing becomes providing salespeople with enough leads to speak to.

Roff-Marsh suggests restructuring marketing into two groups:

a./ Marketing communications

b./ Promotions

In the financial planning firm context I would see these two groups doing the following

Marketing communications

This team will be creating content, news, updates and education for the existing clients of the firm. What most firms would think of as content marketing, but aimed at their existing clients.

This is incredibly valuable, but non-existent in most financial planning firms. Making it one of your focuses as you ‘scale’ is a great idea.

I’ve heard US consultant, Angie Herbers, talk about something similar to this idea and her experience is that referral rates from clients can skyrocket as a result.


The task for this team is to replenish sales leads so that if an adviser runs out there are always more in the queue.

As you can imagine, this is a step change in what is being asked of your current marketing team and now they are on the hook and accountable.

My current gripe with most marketing departments (or outsourced marketing suppliers) is that there is zero accountability for delivering something measurable and tangible for the firms they support.

If we measure new, on-target sales opportunities as our only success metric, then holding marketing accountable is clear and simple.

Roff-Marsh believes that in this new approach, outbound marketing becomes more important than inbound, as we can’t usually generate enough inbound leads to keep salespeople busy in this new structure.

He suggests using pre-approach emails to the unlimited supply of new prospective clients currently sitting with your competitors, which forces the promotions team to apply the appropriate energy and effort in coming up with attractive propositions.

Salespeople must always have a full queue of sales opportunities (so promotions must be subordinate to sales and not the other way around).


These changes lead to…

Roff-Marsh believes that restructuring businesses along these lines leads to:

A meaningful improvement in customer service quality

A dramatic increase in (true) sales activity

No significant change in operating expenses

I can see the same outcomes being delivered for financial planning firms that are looking to scale and help more people.

If you currently own a financial planning firm where you’ve raised your minimum client level or minimum fee level, you have a waiting list or are actually saying ‘no’ to new business to manage capacity issues, then restructuring your business into more clearly defined Operations, Sales and Marketing departments might give you a lot more capacity so you can remove these self-imposed restrictions on your ability to accept new work. That’d be a quick win.

However, I expect that almost immediately you will identify a lack of lead flow as your new constraint. With one or two selling advisers who can see 69 new leads per year, most firms won’t be generating enough volume of ‘on-target’ leads.

The first activity to focus on would be marketing communications; getting the flow of information and education right for your existing clients. If that, along with your speedier Amazon-like servicing of client needs generates an uptick in referrals, that will alleviate some of the lead flow shortfall.

Once that is done and you are clear on how much the lead flow shortfall is, you can apply some serious energy and commitment to promotions.

I think there are further benefits for our profession too:

A separation of servicing adviser and new business adviser allows for higher performance in both roles, but specifically, it allows those advisers who love new client acquisition (and are most skilled at it) to spend maximal time in their zone of highest competence and value-added to the business.

I imagine the new client acquisition role to be very well paid (even if there is no variable remuneration component), as it is the skill in the shortest supply.

Servicing advisers can be created more quickly (in terms of training and development time frames) than new business advisers. That allows you to increase capacity far more quickly than under the old-school approach to growth.

Servicing advisers need not forever remain servicing advisers. It could be the first step of an advisory career. Not all advisers will wish to learn the soft skills required to be effective as a new business adviser and a career as a servicing adviser could still be a good one. However, they need not be limited to that role forever.

The clearer demarcation between Operations, Sales and Marketing allows for clear and simple measurement of outcomes, which allows for greater accountability. It’s much harder to shift blame in this new structure.

Operations would be measured against client retention, incremental revenue growth and referral rates from existing clients.

Sales would be measured on their conversion rate.

Marketing would be measured by new on-target leads generated.

Such clarity would allow the ‘real’ issues preventing the growth of the business to surface. The goal is not a witch hunt, or to be firing people left right and centre. The goal is to know precisely what the problem is and to dig in to solve it.

Wrapping Up

If you were going to refer a friend or relative to another financial planning firm (not yours), would you refer them to a firm run like this?

I would, assuming they had retained a solid focus on quality.

But is the approach I’ve outlined a new idea? No, it’s not.

At a conference I ran for my Uncover Your Business Potential community, where I explained this idea in a presentation, one adviser pointed out that the approach was already being used by one very large and well known financial services brand in the UK.

Likewise, one of Australia’s most successful and scaled financial planning firms back in the day, called IPAC, used to run a model similar to this. They certainly had a split between ‘hunting’ and ‘farming’ advisers. New clients secured by an adviser were passed across to a servicing adviser and support team immediately.

Am I saying this approach is old hat? Far from it. Justin Roff-Marsh has explained a new way of organising the sales function in modern businesses. Clearly, he’s done that because many businesses he’s worked with as a consultant via his firm Ballistix have not been structured in this way.

And I’ve taken only a few key pieces of his approach to keep it accessible for smaller financial planning firms.

My point is, maybe this idea is not brand new, but it’s come around again new and improved and ready to be used. And I feel it has a ton of application for financial planning firms that recognise:

a./ They want to help more people get access to high-quality financial planning advice.


b./ Scaling the sales division of a traditional financial planning firm is the biggest handbrake to growth.

The fact is, next to no one is designing their financial planning businesses in this way, so there’s an opportunity to get a lead on other similar-sized businesses.

If you can take this idea to heart and re-design your financial planning firm in a way that allows you to scale (whoops, I mean “help more people”), you can change your own future as well as that of the whole profession.

In Summary

Financial planning delivered by independently owned firms is the killer service in the market. So why do the bigger branded players still control the lion’s share of the advice marketplace? It makes no sense and it’s time we called out the issue.

If we want to make an impact, independently owned financial planning firms need to reach more people. Saying, “we need to reach more people” is easy. The real challenge is in ‘how’ to make it happen as a profession.

Let’s redefine what others might call ‘scaling’ as, ‘working out how to help more people’. That sits better with most financial planners.

The three certainties if you run your own financial planning business?

You will attract more clients

You will need to manage continual growth (even if you don’t want to)

You will be the handbrake in your own business

You shouldn’t be trying to stop growth, you should be learning how to manage it.

There are three limiting beliefs that most adviser-owners hold about growing their business.

Limiting Belief 1: “If I grow my business I’ll have no life” – but remember, you set the parameters against which you can grow the business. We call them the unwritten rules of the game.

Limiting Belief 2: “If I ‘scale’ good advice, I’ll lose the quality”

Says who? This is not a risk, it’s a choice.

The idea that sits at the centre of your business is very, very important. When push comes to shove, all other actions and ideas in your business will return to the most important idea that sits at the centre. It’s inevitable.

So make the idea at the centre of your business a good one.

Limiting Belief 3: “I’ve only got another 5 years and then I’m out”

When I hear that, the thought that immediately goes through my mind is: “So make them count.”

3 years, 5 years, or 10 years is an eternity if you’re focused.

Most firms are following the old-school growth model (unwittingly in 99% of cases) that involves hiring a new adviser and letting them build their own book of business.

It takes too long and leads to individualistic thinking and behaviour.

The alternative approach (based on Justin Roff- Marsh’s ideas) involves clearer demarcation between Operations, Sales and Marketing:

Operations should be measured against client retention, incremental revenue growth and referral rates from existing clients.

Sales should be measured on their conversion rate.

Marketing should be measured by new on-target leads generated.

A separation of servicing adviser and new business adviser allows for higher performance in both roles, but specifically, it allows those advisers who love new client acquisition (and are most skilled at it) to spend maximal time in their zone of highest competence and value-added to the business.

Servicing advisers can be created more quickly (in terms of training and development time frames) than new business advisers. That allows you to increase capacity far more quickly than under the old-school approach to growth.

Servicing advisers need not forever remain servicing advisers. It could be the first step of an advisory career.

All of these changes to the traditional structure of a financial planning firm will lead to:

A meaningful improvement in customer service quality

A dramatic increase in (true) sales activity

No significant change in operating expenses

And most importantly, the ability to help more people and grow businesses faster and larger, thereby making a bigger impact in the world.

And if you apply the unwritten rules – remember those from the beginning of this paper? – then you can grow your business and have a life too.

What’s not to love?

What do you think?

I’d love to hear your thoughts on this idea. Email [email protected]

Here is Dan Pink’s TED Talk – on what really motivates people

It’s well worth watching because it might just prevent you from creating some crazy-assed incentive scheme that won’t achieve what you’re looking for.

Dan Pink: The puzzle of motivation TED Talk

About Brett Davidson

Brett is the Founder of FP Advance and Uncover Your Business Potential, a transformational coaching programme for adviser-owners who want to create world-class financial planning businesses.

He helps great financial planners become great business people, so they can stay in love with their business and fulfil their potential.

Professional Adviser magazine rated him one of the Top 50 Most Influential people in UK financial services on three occasions – an honour backed by his robust “Little Black Book” of powerhouse contacts.

Brett’s mission: to wipe out the musty old “conflict of interest” model and turn the financial planning industry upside down, one firm at a time. He’s made great headway, having worked closely with hundreds of financial planning firms in the UK, Ireland, the Netherlands, the Middle East, and South Africa, to make their businesses more fun, client-focused, and profitable.

Before coming to the UK, he was a partner in a leading Sydney-based financial planning firm and helped change it from a stodgy, commission-based insurance business into a breakthrough, ‘win-win’-style financial planning firm, before his exit at the end of 2003.

Personally, Brett is no stranger to ditching the status quo. In 2015 he and his wife Debbie sold most of their possessions, rented out their home in London and went travelling full-time, without their business skipping a beat. They were even featured in a piece in the New York Times, by Carl Richards from Behaviour Gap.

Brett has written regularly for some of the UK’s leading industry publications, including New Model Adviser, Adviser Business Review, Money Marketing, and IFA Magazine. His blog, full of inspiring free business tips, has the industry frothing for each weekly post.

His spare time is mostly sports time. He likes to keep fit with a little bit of boxing, some skiing in the winter and time at the gym. And at rest, he follows rugby, boxing, NFL and Formula One.

Occasionally he dusts off his 1995 Custom Shop Fender Strat to play with his band, The King’s Cats.

He’s married to Debbie who is Chief Executive at FP Advance.

You can follow Brett online and via social media:

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Here’s How You Can Work With Brett

Being a great financial planner doesn’t make you a great business person. But I can.

I’ve spent the last 20 years of my life helping financial planners fall back in love with their business, to achieve personal fulfillment and transform the trajectory of their business journey.

My signature programme, Uncover Your Business Potential turns great financial planners into great business people and creates the resilience that independently owned firms need to survive and prosper. It’s like an MBA for financial planners.

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