The day-to-day running of a financial advice business can be an all-consuming process in itself, often getting in the way of finding the time and space to make strategic decisions. Add to that the time pressures of life in general and finding time to plan ahead can be challenging.
Delving a little deeper into this, the UK financial advice industry on the whole has been enjoying a prosperous time of late. Pensions freedoms, attractive DB transfer values and lower adviser numbers in the wake of RDR have driven increasing demand for advice in the market.
Further fuelling this demand is the fact that we are enjoying a nine-year bull run which has seen investor confidence boosted, creating significant tailwinds for those in the advice business.
With everything appearing so rosy in the advice garden, what encouragement is there to make time for strategic planning? After all, if it’s not broken, why fix it?
But – there’s always a but – what happens if the tailwinds start to change direction? What if the markets turn and investor confidence turns with them? These are scenarios that we’ve all seen before and will, most likely, see again. Strategic planning plays a fundamental role in mitigating against such circumstances.
Financial advice businesses need to make decisions about the type of business that they want to be. They can take control of this and set themselves on a deliberate path to achieving the outcomes they want to achieve. Is the goal of the firm to maximise cash flow or enhance the value of the firm? If no objectives are set out, then many firms are left in the situation of landing between targets, achieving more moderate results than were possible.
From the advice businesses that SEI has worked with here in the UK and in the US, it is clear that there are four key components to any successful advice business: people, the proposition/brand, investment philosophy and technology.
By maximising these components, firms stand a better chance of reaching their targets and navigating through choppier waters than we have been experiencing of late.
Of all the firms that we have interacted with, on both sides of the Atlantic, there are shared learnings that can improve any advice business. After all, the fundamental goals remain the same wherever you are operating. So, whether your business is a lifestyle or enterprise model, strategic planning is key to achieve your goals.
With our shared experience, SEI has produced a paper on the importance of strategic planning and how to develop a clear strategy in the advice industry. It is never too late, nor too soon, to set about planning. Every business needs to capitalise on the good times and mitigate against the not so good times - clear, concise planning is the best way to achieve this.
The purposeful advisory firm can be freely downloaded here.
Nigel Brook-Walters in the head of SEI’s Trust and Advisory division in the UK.