17th May 2013
FundsNetwork: No small change – benchmarking the adviser business
- Guide produced by CWC Research, in association with FundsNetwork, aims to set target benchmarks for advisory firms post-RDR
- CWC Research consulted with leading advisers and industry experts on what would make an optimal and competitive business for the years ahead
- Guide offers suggestions to adviser firms looking to evolve their business models in response to regulation
CWC Research, in association with FundsNetwork™, has launched a guide on how adviser business models might profitably evolve in the post-RDR environment. The guide, ‘No small change – Benchmarking the adviser business’, includes thoughts and analysis from leading advisers and industry experts.
Focusing on small to medium sized firms, the guide is designed to further the debate on the optimal business model against a backdrop of increasing regulatory cost, more demanding customers and explicit charging.
Key recommendations from ‘No small change – Benchmarking the adviser business’:
- Firms first need to define their proposition – what do they do, how does it add value to the client and how can the proposition be described to the client? This will help to shape clear client and fee propositions which will be key to survival post-RDR.
- It is important that firms work towards an advice process that is uniform for all the advisers within their business to meet customer and regulatory expectations.
- Advisers who can sell the proposition, the ‘rainmakers’, are the scarcest resource - firms should seek to leverage this by limiting their involvement in routine activities as much as possible.
- Firms should consider expanding the role of paraplanners/internal advisers so that the client becomes a client of the firm, building the value and brand of the business and providing the client with a continuity of service.
- Firms that have ambitions to grow shareholder value would benefit from a dedicated management team. This brings a requirement for the business to be of sufficient size for the fixed cost to be spread across the advisers and not be a cost drag on the business.
- Fee-based firms of the future will need to measure and understand the full costs of their services and have sound management information on all cashflow – both in and out of the business.
Clive Waller, managing director of CWC Research, comments: “Adviser firms have made huge strides in changing their business models to meet the requirements of the RDR. However, this is only the starting point as all stakeholders – asset managers, platforms and distributors will be evolving their propositions and new entrants will be pushing the boundaries to challenge current players. The successful adviser business will be curious and will want to continue the process of their evolution. It is the purpose of this paper to try and see what ‘good’ will look like in the coming months and years.”
Paul Richards, head of sales at FundsNetwork, comments: “Now that we have moved beyond the frenetic activity of RDR implementation and its consequences are starting to become clear, it is essential that we look to the future. All of us, whether we represent platforms, fund managers, or life companies have a stake in the continued vibrancy of financial advice. In sponsoring this guide from CWC, FundsNetwork is pleased to support the on-going debate surrounding the optimum post-RDR business models. We hope advisers and firms will find the guide both informative and thought provoking.”
Comments from leading advisers in the industry:
John Porteous, head of wealth management, RDM Tenon, comments: “This is a highly comprehensive and thought provoking piece of work. Each section highlights valid and legitimate issues that are representative of the competitive challenges in the industry today.”
Alan Smith, CEO Capital Asset Management, comments: ”In the new post RDR world, IFAs and wealth managers will need to operate in a highly structured and operationally efficient way in order to survive and prosper. This guide provides a valuable framework to assist managers and business owners to understand and implement ‘best practice’ solutions which will drive profitability and long-term growth.”
Georgina Partridge, partner at Plutus Wealth, comments: “An excellent and positive overview of how the face of financial advice should look in the future. An invaluable reference tool for IFA business owners.”
To download a copy of the guide visit www.fundsnetwork.co.uk
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