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Building a Better Business

23 August 2017

Address three key areas to make your business as efficient and profitable as possible, writes Nick Peters

building a better business


Address three key areas to make your business as efficient and profitable as possible, writes Nick Peters

A question I often ask at the start of many conferences or seminars I speak at is: “Do you think you are business people or financial advisers first?” This might seem a strange question, but in my 30 years’ experience many advisers don’t think of themselves as business people.
It is important for owners to primarily consider themselves so; they need to be making business decisions on a regular basis to successfully run their companies. If the business isn’t run in an effective and cost efficient manner it won’t be able to provide the best service to clients and won’t be as profitable or saleable as it could be.
There are many areas to consider when ensuring a business operates at its most profitable, but I believe there are three key ones to address:

For a profession that relies on planning to provide solutions to clients, it is strange how few retail financial services businesses have a fully thought-through business plan. In all the surveys I’ve carried out, only around one-fifth do.
A business plan is an asset to the whole business and shouldn’t be seen as an inconvenience, irrelevance or chore. It creates structure, future planning and a roadmap for the business to achieve its aims and objectives. It makes life a lot more relaxed, as there is a path to follow.
It also identifies tasks and places them in a logical and structured order and avoids the disjointed approach I see so often where many tasks are initiated, but not necessarily in the best order or in a joined up way.
One firm I worked with commissioned the development of a website, but ended up wasting a lot of money in development costs because its owner was unable to provide a succinct description of the business. For example, owing to the lack of a clear brief, the graphics initially used depicted young people and families – for a firm whose target market was at- or pre-retirement.
This disjointed approach is something I see frequently. Sometimes the core ethos of the business isn’t even communicated internally let alone to clients and professional connections.
An integral part of any business plan, therefore, is the vision statement. This is usually a single paragraph that embodies exactly what the business is, what services it provides to clients and defines the profile of those clients. It should go beyond saying you are a firm of financial advisers; this simply identifies your profession and not what your business is about.
The next step is to consider the direction of your business. Stand back and think about where you want your business to be in three or five years’ time. What steps do you need to take to achieve that objective? What needs to change? Then fill in the gaps with how it’s going to change and the timescales.
The task isn’t as onerous as you might think; probably much is already swimming around in your head. Structure these thoughts and put them on paper, then don’t file away your business plan, keep referring to it.
Don’t keep it to yourself either. Share it with staff so that they can help to achieve your vision. Even share parts of it with clients so that they can embrace your business and what you’d like it to become.

It often surprises me when I’m talking to financial advice business owners that many seem to find it difficult to clearly define what they do and who they do it for – this is what a client service proposition (CSP) will clarify.
A well-defined CSP ties in with your vision statement and gives clients, potential clients and professional connections a clear understanding of the services you can provide. It gives clients confidence in those services and reinforces your belief in your proposition.
It also helps you to define your ‘benchmark’ client. By drilling down though your database of clients and customers (many will just be customers), you can ascertain those who are currently profitable and those who could be.
It enables you to deal more effectively and more profitably with fewer clients, but it’s not simply about getting rid of clients; it’s about looking at different ways to engage with clients – finding solutions that lower the profitability bar – thus bringing more client relationships into profit.
In undertaking this task, it is vitally important to know the costs and profit centres within the business. How much does it cost to carry out a task – are you charging accordingly? What’s the cost of acquiring or maintaining a piece of business or relationship? Have you factored in other costs, such as PI insurance?
It is feasible for a practice to have different classifications of client, but you should only target those who match the profile you’ve set. If you have a perfect or benchmark client profile, why target anyone else?
There will always be a number of individuals who no longer fit your profile and profitability requirements and once all options have been exhausted you will have to consider how you elegantly disengage from those clients.


When it comes to staffing, many of the business owners I see mistakenly assume that my recommendation will automatically be to get rid of staff.
There is a myth that support staff are expensive and you should endeavour to have as few as possible on as little pay as possible: this is a fatal mistake. The role of the support team is crucial to the success and profitability of the business.
If structured correctly, the support team can actually generate real income to the business and become a profit centre in its own right, as well as increasing productivity by freeing advisers to concentrate on more lucrative parts of client relationships.
This requires an element of trust and delegation that is sometimes difficult to achieve initially, but with the right training and coaching derives a real financial benefit.
A fully integrated operation providing a seamless approach is vitally important to the quality of service provided to clients. Even simple things like ensuring the support team is the first point of contact for clients will achieve vastly improved results, as well as giving the client a sense of being looked after by an entire team rather than just a single adviser.
Think of a restaurant – for that to operate successfully and profitably there are a number of functions carried out by various members of staff best suited to the task in hand. You wouldn’t expect the chef to wash pots. It is the same in our profession.
Everybody should have a fee rate; you wouldn’t expect a member of the team with a rate of £150 per hour to undertake photocopying, for example.
Regardless of your fee structure (hourly rate, fixed cost, percentage of funds), it is still vitally important to know the hourly rate for each member of staff, including yourself, as only then can you truly know the cost breakdown for each task.
Without this you will never know where you are making a profit and where you are not – and where you can take steps to improve your bottom line.

Nick Peters is head coach at New Adviser