What does 2022 hold for financial planning?

By BRETT DAVIDSON

For most financial planning firms, 2021 was a killer year. Despite the ups and downs of the pandemic, business was really solid.

What about this year? What are the big issues on which you’ll need to focus for your business to continue on the same trajectory?

There are five major themes that I believe most firms will be dealing with in some way shape or form in 2022:

Sale and succession

Loads of business owners are flirting with the idea of selling their business. It’s a function of the industry demographics; I get it. However, here are some things to think about:

1. All owners that I speak to tell me that making sure their clients are taken care of after they’ve sold is really important to them. Yet, invariably their buyer is one of the consolidators who “promise the world but deliver an atlas.” Almost inevitably that will mean moving clients across to a less than client-friendly, vertically integrated investment model.

2. Well-run advice firms are incredibly profitable with net profit margins of 25% of turnover. These firms don’t need to make money from anything other than their advice. And contrary to popular belief good advice businesses can be scaled up, but it takes work. Just like scaling any other professional services business.

3. Average or poorly run advice firms on the other hand can only be made profitable by some hard work, OR by jamming all their clients into an expensive investment proposition that makes all the money. Just look at any vertically integrated advice business for proof.

Lots of delegates on my Uncover Your Business Potential (UYBP) programme have joined to deal with sale or succession issues. It’s the perfect place to sort through those final issues that can make your business really attractive to ‘good fit’ external or internal buyers.

Our next UYBP programme starts in March. If you’d like to talk to me about whether it’s right for you, email me via brett@fpadvance.com and we can set up a call.

Zoom meetings

How are you feeling about meetings on Zoom?

I hear from lots of advisers that they’re longing for more face-to-face contact with clients, as it feels like the best way to open and maintain good relationships.

However, many existing clients are opting to remain on Zoom meetings. I’m hearing as many as 50% of clients are happy to continue in this manner, having grown comfortable with it during the pandemic.

You can treat this as an opportunity or a threat. (I know which one I’d be choosing).

Firms with a strong niche can (and do) attract clients from all over the UK (and abroad) and so this new willingness of clients to meet over Zoom has opened up a world of opportunity. All you need is a great niche and some marketing that generates the required lead flow.

Working from home

Like Zoom meetings, working from home (WFH) seems to split opinion. Some adviser-owners are open to it, while others are adamant they want their team in the office full time. I believe that getting this right or wrong will have huge implications for you and your business in three ways:

1. For retaining existing staff

2. For recruiting new staff

3. For the future of your office space needs

The labour market is still incredibly tight. So offering maximum flexibility should allow you to attract the widest possible field of ‘A’ class candidates. If it was me, I’d be adopting a person by person analysis of who does and doesn’t need to be in my office. Clearly, some of that is role-specific. For example, if I want a person on reception greeting the clients that do come in for face-to-face meetings at the office, they’ll need to be office based. However, almost every other role in a financial planning firm could be delivered remotely (at least some of the time). I’d be looking at three types of employees as I evaluate the work from home options:

1. The superstar employee – what do THEY want?

2. The superstar recruit – what do THEY want?

3. The good (but not great) performer – what do YOU want?

The team

You can’t build a great business or a great lifestyle without the right team in place.

I hear that you don’t like managing people.

I hear that you struggle to recruit effectively.

But you’re going to have to deal with both of these issues because there’s no other way to let you focus on what you’re great at, seeing clients and helping people.

One solution is to get a Practice Manager. Then they can handle these issues for you.

If you’re determined to stay as a smaller lifestyle business and you don’t want the staff hassle, then outsource to the myriad of paraplanning and administration support firms. Yes, you’ll have to accept the trade-offs that this will bring, but they’re a totally acceptable solution when you compare them to the problems they solve for you.

When you get the team right you can sprint at 100 miles per hour.

If you don’t have the team right, it’s like trying to sprint with a truck tyre tied around your waist.

Pricing

I don’t care how you decide to charge, but you have to get your pricing level right. Without the right level of pricing (and that implies it’s a premium price for a premium service) you’ll be perpetually cash-starved. That prevents you from investing in the team and support you need, or the new tech that might help you improve overall productivity. As you consider how to price your service correctly for your business, I want you to cut through the considerable noise around pricing that you’ll hear in the market by remembering these two statements:

• If something’s a stupid idea but it works, maybe it’s not stupid.

• And conversely, if something’s a great idea but it doesn’t work, maybe it’s not so great.

You’re not trying to copy what another firm or leading adviser does. You’re trying to work out what’s right for you and your business. Keep that front of mind throughout the process. Honestly, clients know they have to pay. And once they know, like and trust you, they’re not too fussed one way or the other about your pricing strategy.

BRETT DAVIDSON helps financial planners take the headache out of running a business, so that they can get back to doing what they love — looking after their clients. This article was first published on Brett’s blog and is republished here with his permission. ALSO BY BRETT DAVIDSON

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