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4 key ways advisers must adapt to prosper

Ileana Sodani, chief relationship officer, Pershing, highlights four ways advisers must adapt in order to continue to grow profitability and posper in an environment of continued regulatory, technological and industry change

New opportunities for growth are continuously emerging in the wealth management sector and firms need to plan carefully to ensure they are making the most of them.

In the ever-evolving industry, advisers need to adjust their business propositions, analyse the core components of their business and adapt to their clients’ changing needs to ensure their service offering meets expectations at all times. This is more important than ever as new business models enter the market and competition increases.

Delivering outstanding service will retain clients and generate referrals to support new business relationships. However, to ensure profitability and long-term success, client retention and attracting new clients need to be balanced carefully. There are a number of areas advisers need to focus on to continue to grow profitability amid an environment of continued regulatory, technological and industry change:

1. Client base

Think long term and multi-generational. Think beyond the person sitting in front of you – what about their spouse and possible children? Target new market segments, for example by developing services addressing the specific needs facing entrepreneurs. New types of investors bring a number of new challenges and advisers need to respond to these challenges by investing in improved digital solutions. Pension freedoms will also create a new band of mid-tier investors, who may not have previously required access to financial advice. The unlocking of pension assets will enable them to access wealth and advisory services, and advisers should not underestimate the opportunity in this large and potentially lucrative sector.

2. Product/service offering

Adapt your services to meet client and market demands, such as changes to retirement planning. Provide a holistic service which allows clients to grow with your firm. Bringing together pensions, tax-free savings and investments along with other income streams is becoming increasingly important as pension assets begin to mirror ISA assets. It is therefore important for advisers to be able to develop integrated, whole of wealth strategies to meet retirement income requirements.

3. Pricing

Advisers need to demonstrate the value of advice by providing clear, value-driven charges. Firms need to present a clearly differentiated business model which highlights service benefits in a consumer-friendly style. Following the transparency forced through the RDR regulation, robo-advice is fast becoming a popular emerging concept; but technology moves fast in this space. To succeed, firms need to ensure they can deliver this service in a cost efficient manner and create flexible investor communications models. This will allow investors to interact through the most appropriate channel for the transaction they are undertaking.

4. Human capital

Under investing to harvest profits can be detrimental for future success. Attracting new talent is vital to unlock new market opportunities. Firms should develop effective recruitment and retention strategies, for example offering flexible working arrangements and professional development through coaching programmes. Both one-to-one and group coaching programmes can help advisers learn how to segment their clients, strengthen their relationships and improve the efficiencies of their businesses. Diversity of thought is also crucial and shifting demographics mean that old formulas for success no longer work. As an example, female and younger advisers can help unlock a variety of new market opportunities and provide a solution to the industry’s persistent talent shortage.

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