Professionalising your business

Many independent financial planning practices in South Africa are operationally inefficient and lack the strategic thinking necessary to deal with the never-ending wave of regulation and the rapidly shifting patterns of consumer behaviour. Consumers in So

The change in the way the financial planning industry is conducting business will continue to have positive spin-offs for all stakeholders involved. As IFA’s professionalise their practices -both strategically and operationally - renew their focus on self-education and become aware of the value of relationship marketing, networking,  partnership, customer delight, reputation management and consultative selling, the perception of the industry will continue to improve. Only the talented marketers and professional business managers will win the race. Those with the foresight to lock themselves into partnerships with like-minded peers and product providers that can complement their businesses, will differentiate themselves.

Mike Clare, head of IFA Distribution at Investment Solutions states that professional practices typically have:

- A clearly defined business strategy that has been formulated with the help of outside expertise.
 
- A clear vision, quantifiable business objectives and an implementable plan.

- A culture of eliminating all operational inefficiencies.
 
- A passion for developing themselves and their people.
 
- Started transforming to a fee-based remuneration model.

- Embraced technology as an ally and not a threat. They use technology appropriately at the point-of-sale as well as in the back-office.

- The habit of spending more time on their outboxes rather than than on their inboxes.

- A drive to grow their annuity income.

- Selected their partners well.

Of the above characteristics, the ability to form true partnerships will perhaps have the biggest impact on the immediate future facing the IFA. Investment Solutions have launched an offering called Independent Partners and have crafted their retail strategy around this principle by ensuring that they:

- Protect the IFA’s independence by not seeking to buy a share of their businesses.

- Build bespoke segregated-mandate portfolio solutions using their life licence.

- Challenge the retail fee conundrum by offering clean pricing, free of confusing rebates and vague descriptions of underlying costs.

- De-risk the IFA’s business with an understandable and transparent portfolio solution.

- Share their pricing power, research muscle and portfolio construction capability.

- Eliminate the administration cost to clients.

The net result of this is that those IFA’s who partner with Investment Solutions are able to focus on managing client relationships and financial planning risk whilst offering their clients the lowest TER portfolios in the market.

In a value chain where all the leverage sits with the IFA, those who are able to partner selectively and astutely will prosper. A professional practice backed by a large corporate partner that is on a mission to ensure a fair deal for customers will easily transition beyond RDR.  Those who choose to keep their heads in the sand may become extinct.