A win-win strategy for a sustainable practice – Part 1

14 February 2021 Myra Knoesen

In South Africa the financial services landscape is facing a hurricane of changes not to mention the issue of regulation, customer awareness, the threat of direct competition, skills shortages, market competitiveness and inflation. It is concerning and the question is, will advisers be able to adapt and survive these changes in a sustainable manner?

Pondering the thought, it is often difficult for advisers and intermediaries who are under increasing pressure with legislative bodies that are demanding more, to maintain the right balance between providing all the required information to clients, maintaining a competitive edge and running their practices in sustainable and ethical ways.

Daniel Russell, Managing Director at Verbatim Asset Management, recently shared some interesting words of wisdom for advisers. 

Words of wisdom

“Amid the maelstrom of regulatory activity and continuous market change, I often hear owners of advisory businesses talk about the struggle just to keep up with it all, let alone consider the big picture items,” he said. 

Building capital value in an advisory practice requires a focused mind, said Russell. He believes business owners should ask themselves three fundamental questions which are, what business am I in? Why am I in this business? And, what do I want to achieve with this business?

It is important to look at practices to identify how to adapt methods for continued success and sustainability. According to Russell, the answers to the questions above are fundamental to creating a winning strategy for your business.

So, without further ado, let us look at the fundamental questions that Russell highlights.

Determining your expertise

Russell mentioned that it is essential to determine what business you are in. He advises you to ask yourself if you are in a financial advice business. “Are you a wealth manager? Are you a financial planner etc?” He questioned. 

“There have been countless firms across many sectors that have lost sight of the requirements of their customers. For example, the American railroads company who thought they were in the railroad business but were actually in the business of transporting people and goods - a misconception which led to them eventually losing out to the airlines,” said Russell. 

He continued by mentioning that there are also examples of businesses that used their resources and capabilities to shift their delivery in line with their customers in order to thrive (such as IBM, focusing on technical services and consulting and selling off its PC and laptop manufacturing).

“If you are charging fees yet are still in the business of intermediating products, I believe you have a serious problem. However, charging fees for valuable financial planning that is not reliant upon the intermediation of any one type of product is a way of aligning yourself directly with a growing consumer need,” he said.

In part two of the article, we will look at the other two fundamental questions that Russell highlights.

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