An interesting dilemma !

For a number of years at the end of our business financial year Jean and I have sat down and discussed how much longer we intend to remain in business. We have run our business for 35 years now and our clients are an integral part of our lives and it is their future rather than ours which gives rise to concern for us. Our clients have remained on board through all of the regulatory cycles and vocabularies and even when we changed our remuneration process back in 2003 they seemed to trust that we knew what we were doing and that it would be of benefit to both of us.

About six years ago for health reasons we gave away almost 400 accounts to other IFA,s leaving us with 250  to look after. We received no payment for these clients and our only stipulation was that the clients were to enjoy the same terms that they had with us for the following twelve months. Our impression was that as these clients were all paying a recurring 1% on their Transact accounts any IFA would be only too glad to provide a service to them and indeed look to expand the relationship we had enjoyed. Sadly there has been an almost universal disappointment as the new advisers seemed happy to simply take the existing income and renege on any concept of communication or ongoing servicing.

Our business is very profitable and rather simple to maintain, which is has to be with just the two of us and one part time self employed administrator, but we have to be realistic and acknowledge that whilst we thoroughly enjoy working the time will surely come when we just have to stop. We are fortunate that we are now economically independent so are not reliant on receiving any significant sum in exchange for our business but we do want to do our very best to provide our clients with a standard of continuity which matches that which has been quite normal for them over many years.

All of our income is derived from ongoing charges on wrap accounts ( one wrap ) for which we provide whatever financial advice or service is required by clients. The business has 35 years of audited accounts, all available online, showing consistent growing profitability and they underpin our expectations from anyone assuming responsibility for our clients.

Apart from the usual consolidator offerings we continue to struggle with a solution for our future and would be very interested in hearing your ideas.

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6 thoughts on “An interesting dilemma !

  • Hi Phil, what an unusual request!

    I would have thought a bit of due diligence would help uncover someone local to you who could help out. Your post got me thinking about what I would want to see that would prove a firm genuinely has a focus on ongoing service.

    Proportion of income from existing clients might be one. Staffing roles might be another (we have one member of staff who only deals with booking and preparing client annual meetings, for example). Adviser to support staff ratio possibly – is the firm all about one or two advisers or do they have a genuinely team based proposition.

    Although it’s by no means a certainty, but membership of IFP would be a good hint. A commitment to planning, use of cashflow modelling, a proposition built around regular meetings.

    Surely there must be someone near you that has this sort of proposition?

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  • Hard one Phil.

    I’d guess I’d add ‘culture’ to that list. Any new comer can never be you, but having similar values I’d consider top of my list. Judging by your past comments though, it’s going to be quite a feeling of loss, whatever happens.

    Good luck with it.

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  • Hi Chris,

    Thank you for your comments and also thanks to those who have contacted me directly with their thoughts.

    I did try and put up a reply earlier but it seems to have disappeared into the ether ! If it does appear I apologise for any repetition !

    You mention a number of qualities that should have a place in any modern advisory firm and indeed amongst the people who we have met many proudly display such credentials. Sadly our experience is that for most they are just window dressing.

    Perhaps the most surprising thing to us in the post RDR world is how many advisers ( firms ) remain committed hunters as opposed to farmers and see clients and the public in general as targets rather than as relationship partners, Indeed the most common almost universal interest shown by people who have looked at us has been in potential fund churning ( cash generating ) opportunities our business model offered to them.

    incidentally our clients are spread throughout the UK and in many other countries in the World, having stayed with us as their lives have evolved. Technology in the form of on line accounts, e-mails and Skype etc. allow us to stay in touch wherever they may be although modern international tax legislation does keep us on our toes.

    We have had the benefit of doing the job for a long time and know well the benefit of long term relationships and especially the security which comes with recurring income provided by your client as opposed to a provider.

    Regards, Phil

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  • Another thought from the enjoyable dialogue being generated .

    Traditionally advisers gathered assets for providers who paid them well but only once . Providers then paid themselves via amc,s for as long as they were contractually able to do .

    If the adviser side of the industry does not develop an alternative business disposal process to consolidators then we have simply replicated the Provider model for the benefit of the consolidator.

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  • Just read your comment on Paul Resnik’s piece about robots. 2+2=5. Why not employ a programmer and replace yourself with a robot?

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    • Often think I am a bloody robot Phil ! I am amazed that so many people apparently read these blogs and yet so very few actually participate and express their views. Over 800 read the Robo Advice thing presumably because it is a frightening thing for them and yet no comments. Very puzzling.

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