Advisers Failing to Take Own Advice

Despite spending most of their days helping clients build a plan for their future, the majority of financial advisers do not have a plan in place for their own business, according to one industry consulting firm.

Business Health has released the findings from the latest iteration of its Future Ready study, which measures the relative ‘health’ of advice businesses against a series of best practice benchmarks. The latest report, sponsored by Rubik, reveals that only 42% of practices have a documented three-to-five year strategic plan for their business.

Business Health also found that many advice businesses were failing to create other plans that are regularly discussed with clients. Just 41% reported having a clearly documented 12 month operational plan. In addition, only 39% of advice practices had a documented succession plan, and just over half had a key person plan in place.

While the number of practices that are implementing short and long-term business plans is at the highest level recorded since the inception of the Future Ready survey (in 2004), Business Health said it was still somewhat surprising that so many weren’t devoting time to planning, given the role advisers play in their clients’ lives.

“It is quite ironic – planners and advisers, by their very nature, do plans,” said Business Health Principal, Terry Bell.

“This represents a significant opportunity for practices – those that have invested time and effort into building an effective strategic plan are generating, on average, 194% more profit per owner than those with no plan.

…there’s been significant improvement in a lot of businesses

“We believe firmly that licensees have a major role to play here. For example, licensees should be having business planning forums or masterclasses for their advisers, because it’s clear that this stuff works.”

“It should be acknowledged that there’s been significant improvement in a lot of businesses,” added fellow Business Health Principal, Rod Bertino. “The reasons why are varied, and the positive markets have definitely helped, but there’s a lot of great stuff being done at the practice level.

“We are delighted to see how positive principals are when they look forward to 2015: 92% are looking to increase revenue; 86% are looking to increase their fee-based revenue; 60% are looking to increase the number of strategic alliance partners that they have… But all this won’t just happen – it needs to be driven by a plan.”