by Rory Curran, Executive Chairman, 1st

(Taken from ‘create time for advice’ white paper available at www.1stsoftware.com)

Rory Curran, Executive Chairman, 1st

Time spent with clients generates revenue and secures long term relationships, both of which add capital value to a business. This is pure commercial common sense. However, the impact of regulation and the general inefficiency of the industry have forced many advisers to spend the majority of their time on non-income generating tasks. In fact, it has reached the stage where this is the accepted working practice of many financial advice firms and, unless there is a change, many adviser firms will become unviable. This is ironic when we live in a time of economic prosperity where the need for independent financial advice could not be greater. Financial advice firms of all sizes must change the way they conduct business to concentrate on spending more time with clients.

Anecdotal evidence has always suggested that a great deal of adviser time is unproductive. A 2003 research project (footnote: Profit through Fees, 1st, AIFA, PBA) which covered over 400 firms showed that on average advisers spend less than a day per week with clients. That is only 20% of their time, with the remaining 80% being spent on administrative and compliance-related tasks. No other profession could survive in this way, although it must also be said, that no other profession is so tightly regulated. However, whilst the burden of compliance is seen as the main culprit, it is recognised that this will not go away. More efficient working practices, supported by technology, are widely believed to be the answer.

The economic model of financial advice is shifting away from product sales to long term advice where remuneration is linked to ongoing service. Competent financial advisers should realise they are selling intellectual capital and solutions to financial problems. This provides great value and should be priced accordingly. For example, there should be distinct charges for an initial report; for executing business; and for ongoing service, such as regular valuations. The days of carrying out work for no reward must come to an end.

The FSA menu presents a clear opportunity for adviser firms to examine their services and charging structures. It also gives the opportunity to present and justify the charges to new and existing clients in a logical way. The primary objective of every financial advice firm should be to free up as much adviser time as possible to spend with profitable clients.

Time is of the essence.

To see the complete ‘create time for advice’ white paper visit www.1stsoftware.com

About Rory

Rory came into the financial services industry as an IT trainer in the mid 1980s with LSD software, where he became Customer Services Director. Since then, he has had spells with Fame Computers and The Exchange, but his career ambition was realised when 1st was launched in 1996 with Mik Cons.