Think outside the box for new advice services
Advisers who look outside of their core services to add value to their client relationships can build valuable passive income streams, says Steve Selby, partner, The Affinities Partnership.
Due to changes in regulation post RDR, ever increasing competition and clients continuously seeking value for money, financial advisers now have to look further afield from their traditional core services to increase revenues. By bringing together an extensive range of outsourced services and marketing support they can offer added value to both existing and new clients.
Such services may include an Auto Enrolment software solution, HR Services, and helping companies to claim Research and Development Tax Credits and Capital Allowances on commercial properties.
To be able to offer this, advisers need to review the market, select external product and service providers, negotiate competitive fee structures and offer full on-going support (in addition to carrying out their main core activities).
With regard to Auto Enrolment, there are truly independent software solutions available that range from basic compliance only through to staff communication, HR capability and a platform to enable advisers to offer a full Employee Benefits package should they wish. Using independent software will have no impact whatsoever on the choice of pension provider chosen by the advisers for their clients. And an independent offering may enable advisers to earn a regular passive income from a product that sits outside of the regulated space.
Research and Development Tax Credits (R&D) is an excellent example of where limited companies are losing out by not taking advantage of the full tax credits available to them. As recently as 2010, 93% of eligible firms were not claiming simply because they either did not know about R&D or assumed they were in the wrong industry to benefit (in reality, any company in any industry can claim). It is irrelevant whether a project is internal or external or even if it fails. From an adviser’s point of view, successful credits could be used by companies to fund existing or additional pension contributions. It is also worthwhile obtaining a second opinion on existing claims.
Capital Allowances. Similarly, only 4% of commercial property owners claim their full Capital Allowances. This is because they assume that their accountant has dealt with this, but that is very unlikely as a full survey needs to be carried out. The level of allowances that can be found varies depending upon the type of property but may typically be around 20% of the original purchase price. As an example, care homes or hotels would normally be higher than average and retail lower. As soon as a property is transferred into a pension, all allowances are lost. Companies should always be asked whether they have claimed before a transfer is made. As with R&D, advisers will be seen to be giving a superior standard of service to their client base, in this case by just asking two simple questions about whether full allowances have been claimed and whether a survey has taken place.
Human Resources (HR) is an area that employers now have to address more than ever. Both Employment Law and Health and Safety legislation are going through ever greater changes and it is almost impossible for smaller companies to keep up. Indeed many larger companies with internal HR departments are not fully up to date and could need assistance. It is essential for clients to ensure that they receive the best advice available from experts in the field. One way of ensuring that companies are kept up to date is to hold seminars at which advisers can also take the opportunity of talking about other relevant topical issues.
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