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Benchmarking can help build your business

Benchmarking your business against leading firms in the market is one way to help build success, says Sue Whitbread, communications director, IFP

Benchmarking a business against some of the leading firms in the market is one way to assess where it could build on its success. Earlier this year, the IFP carried out a benchmarking survey of Accredited Financial Planning FirmsTM to find out what makes for success among these top firms, with a view to sharing best practice, and to help and provide direction to other firms who are looking to boost their client proposition and build their businesses. The study was carried out in association with the Phil Billingham Partnership.

So what did we find when we looked at how more than 40 of the leading financial planning firms in the UK run their businesses?

Firstly, the vast majority of firms are committed to giving independent advice as they say it works best for their business model.

Secondly, firms need to be well resourced. As is the case with great firms in all sectors, they need the right human and physical resources such as software, in order to succeed and to keep on developing and improving their business year in year out. Financial Planning is no different.

Accredited firms employ more than two support staff per financial planner, so the emphasis on the team approach to business is key. This specialisation of role in line with each individual’s skills is one of the contributory success factors. As well as breadth and depth, Accredited Firms work hard to ensure that their team have the right knowledge, skills and competence to deliver a real financial planning service. The focus on CFP professionals is important, with firms often citing it as giving them a consistent approach within the business.  Paraplanner support is also an essential ingredient in the mix. As well as research and analysis support, they provide an excellent sounding board for the financial planner to discuss alternative solutions, so that the outcomes for clients are as positive as they can possibly be.

Software and support
As well as employing great people, Accredited firms also use top quality software and support services. This extends from CRM systems, into risk profiling tools such as Finametrica, as well as the all important cashflow modelling software such as Truth or Voyant or other bespoke packages. Cashflow forecasting is the engine of the financial planning process. It provides the vision for the client to buy into the whole financial planning process, reassured that they are on track to achieve their goals in life and their interests are really being put first. It forms the basis of ongoing reviews and ensures that a long term relationship based on trust is developed right from the start. The six step financial planning process is a powerful business driver that can improve consumer outcomes and boost profitability. CFP professionals and Accredited firms are leading the way by demonstrating this in practice.

Business plan
The firms benefit from having a clear business plan in place, which is regularly updated. Two thirds of respondents to the survey said that they’d updated their business plan within the last 12 months. Two thirds of firms have a written profile of their ideal client that they use with introducers and other potential sources of new business. 75% said that their website was a true reflection of their brand and service and told the appropriate story.

Clear investment processes
Having clear investment processes, which are written down, agreed and applied consistently across the business is the case for all Accredited firms. Their investment approach is usually well documented on their website so clients and potential clients can get a really good feel for this well in advance of any face-to-face meeting. When firms consistently use the same investment process, it reduces their regulatory risk. All too often in the past we’ve seen examples where different advisers within the same firm take completely different approaches to investment and portfolio management. For the firm to streamline this makes excellent business sense.

The outcome of all of these attributes is that a “high touch/high tech” proposition works. Accredited firms are generally very well placed to expand and grow their businesses and, importantly for consumers, they receive extremely low levels of complaints.

What can be learned?
So what can aspiring firms learn from this?  Breaking down the client proposition, the following areas should be considered:

  • A clear investment proposition
  • Clear target market
  • Independence
  • Robust risk analysis process
  • Use the best tools
  • Finametrica
  • Voyant and Truth
  • External compliance support

Accredited Financial Planning FirmsTM have been assessed by the IFP to prove that they demonstrate the ultimate in professionalism. They must meet the IFP’s strict criteria covering areas including adherence with a code of ethics, following the six step Financial Planning process with cashflow forecasting as a default service, attaining qualification standards well ahead of the FCA required levels, providing clarity of proposition and fees, and evidencing an ongoing commitment to effective CPD for staff. It’s a rigorous process that takes time and effort but the rewards really do speak for themselves.

Go to IFP website


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