Essential considerations for every IFA

An independent survey conducted in 2015 showed that rising costs and pressure on fees are two major concerns that independent financial advisors have when considering their future in the financial services industry.

In the midst of political, economic and regulatory challenges, new competitors such as direct offerings and robo-advisors, the IFA finds it increasingly difficult to be competitive and profitable at the same time. The Retail Distribution Review has forced every FSP back to the drawing board to rethink the way they do business. Smaller IFA business owners will have to think “out of the box” if they want to remain independent and competitive.

Whilst there are many important considerations, we have selected four absolute non-negotiable building blocks for the small, independent IFA business of the future:

1. Value proposition

According to Ken Blanchard and Spencer Johnson, authors of Raving fans, successful organizations have one common central focus: customers. Financial advisors will do well to remember that clients do not buy “things”. They buy the experience that those “things” are able to deliver and when so doing, they measure the benefits against the cost.

However, in order to be sustainable, advisors cannot allow price to be their only differentiator. Jaynie L. Smith, author of Creating Competitive Advantage asserts that, when you compete on price, you’re accepting commodity status. Find an edge in educating your customers about what they are getting for their money. Even if your product or service isn’t special by itself, the way you … deliver it, as well as other extras you provide, can make the crucial difference in customers’ buying decisions.

To obtain a free copy of the 2015 survey results of what clients value, contact Amity Wealth.

2. Skills

The independent financial advisor in a small business will have to offer something special to their clients to stay in the game. More and more financial advisors are becoming specialists in the art and science of holistic financial planning. Advisors will have to master new skills, such as technical expertise, decision making, leadership and budgeting or outsource some functions to focus on their strengths.

3. Service model

We believe that every client should have a plan and those advisors who want to remain competitive must ensure that they design a sound, comprehensive financial plan for every client. The quality of the initial plan often distinguishes one advisor from the other, but this plan has to be monitored and reviewed regularly.

Too many advisors work hard to be appointed, but neglect the quality of client contacts thereafter, simply because of a lack of structure and efficiencies in their business. Getting the client on board is only the beginning of a potentially life-time relationship. Remember, everyone wants (and deserves) first-class service.

4. Business efficiencies

Technology has been, and will continue to be a major game changer in business. According to the authors of Practice made more perfect, advisors who use integrated technologies have attained 36 percent higher revenue per professional and 30 percent higher profits per owner. However, you can’t point to any one single item that makes the whole thing work; it’s the entire work- all the pieces working together to create an overall effect- that leads to enduring greatness. As a small business owner, you may need help.