IFA’s face significant challenges as they fight for independence

Conflict of Interest legislation served to further entrench fears as this widened the gap between product suppliers and the IFA. Compliance processes and procedures have become even more complicated and these services are rendered at a higher cost as well. Of course, the much debated and talked about changes in remuneration policies and Treating Customer Fairly (TCF) do little to inspire IFAs. None of this is news to the IFA.

For the most part these macro environmental factors are beyond the influence of the IFA. Of course there are organisations out there that "fly the flag”, where the collective voice of the IFA community can be heard. This is an ongoing struggle where issues are dealt with in the context of the financial services sector, the economy, the public and the country at large.

The business of financial planning has changed. The focus of policy makers within Treasury is on professionalism, broader access to financial services by the consumer and most importantly protecting the consumer in the long run.

Pfirestorm works closely with the IFA market and we have a different view about the market. If IFAs are to survive the current and anticipated legislative onslaught, they should be asking, "What can we, the single IFA do?”

• Ask your clients ‘what they want?’

• Develop a Value Proposition that your clients want.

•Use technology to reduce costs and support operations and strategy. However, remember what Bill Gates said, "The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency”

•Dispel the myth that the more clients you see the higher the sales or production. Would you believe that there is a direct correlation between the level of client activity and income?

•Your clients do not want to be financial advisors. However, they do want to collaborate and participate.

•The core purpose of an IFA is to create clients and retain them. What do you do every day and how does that achieve this core purpose?

•Money/income/profit is not the purpose of your business! It is merely a measurement of how well to create clients and retain them.

For those IFAs who want to ensure profitability, the single biggest influence in your business is you. Your clients are your inventory and the way you treat them will determine your survival, growth and sustainability.

No matter whether you are a one man band or are an IFA with a national footprint, your greatest threat is going to be your competitors. For the IFA who does not develop uniqueness and the capability of delivering on that promise, is doomed to fail.

 

Clearly, the road will end for many IFAs. This is not because the industry has changed or that the regulatory environment has created new challenges. Particularly on the issue of business costs. The reason is far simpler.

Charles Darwin said that "it is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change”. This is equally true in business. The IFA is its worst enemy. Amongst challenges lie immense opportunities. It is about confidence. IFAs have the expertise, knowledge, experience and qualifications. Why not use it?

No matter how you look at it, the survival of the IFA is in their own hands. It is about decisions that need to be made in the clear light of day.

 

Henry Ford said, "Whether you think you can or think you can't - you are right. "

What do you think?