Inconsistency Kills The Cat
Every financial services business is built on trust, the more of it you have from the client the more successful your business will be, lose it, and it’s gone forever.
The essence of this precious commodity for any IFA network is consistency. Making sure that financial advice is uniform, coherent and reliable.
This seems obvious enough, and it would be relatively straight forward in a new network establishing itself. However, those that have existed for decades enforcing consistency of service and advice is a major problem.
Plenty of networks and firms which have a high proportion of self-employed advisors, have, over the years allowed a great deal of advisor autonomy which in many instances has proven a reliable and successful strategy.
Letting your team’s most talented IFAs do their best for the client is always good practice, but it has proven to be a model that is both unstable and unsustainable; IFAs without consistency of advice are going to face some significant challenges in the future.
Many older firms have a huge reorganisational task ahead of them, the scale of the job is unenviable. Persuading advisors, many quite late in their careers, to abandon their own views, beliefs and assumptions in favor of a uniform company line will be difficult and in many cases impossible.
Any network is only as strong as its weakest member. As an IFA your advice might be first rate, your track record of solid returns for prestigious clients might also be robust, but the alarming fact is that even if you are a paragon of excellence in your industry, you can still find yourself in a collapsing network.
There is another risk too; a breach of compliance that is picked up by the FCA can see an entire network de-registered for a year, a disaster for all concerned. Keeping a tight reign over uniformity of advice isn’t simply a bureaucratic exercise designed to irritate hard working advisors. It is essential to a network’s collective security; you are very vulnerable without it.
Not only has the end of trail commission resulted in much leaner times for businesses and networks, but the need for consistency is going to place administrative, legal and training burdens on smaller firms that can scarcely afford these additional costs. Major investors can afford to take a hit on these additional costs, meaning that within the next few years the industry will be increasingly concentrated into fewer and larger hands.
Already IFAs are leaving the industry, sadly taking years of valuable expertise and knowledge with them. If you are currently in a network, selling your business to an external company might be difficult, especially as market conditions change with a stampede towards the exit. But one of the key priorities for IFAs who want to remain in the business is to combine their talent with the business know how and systems of a larger firm, like Bradbury Hamilton.
Bradbury Hamilton can help to introduce consistency into what you do, we’re keen to talk to IFAs who either want to sell their businesses and leave the industry, or who would want to come under our wider regulatory umbrella.
We can provide the systems you need to face the many challenges the new charging and regulatory environment has in store.
If you’d like to talk more, please contact me here.