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Three key elements to adviser business success

Three key elements will enable financial adviser businesses to be successful over the next few years and they work hand-in-hand, says Roland Rawicz-Szczerbo, sales director, Time4Advice                                       

The systematic change instigated by the RDR has seen our industry experience significant challenges and on an unprecedented scale over the past three to four years but it has probably impacted hardest on the individual financial adviser business.

A lot of firms’ attention over the past few years has been focused on ensuring all the relevant staff have the right qualifications to continue practicing under RDR rules and beyond and putting in place a charging model that is
not transaction based but rather service orientated. But now many firms are refocusing on how their business should be structured and what it should look like in the next few years.

For many firms RDR has turned their business model on its head. This fundamental shift away from the model most advisers have been using – a business model remunerated by sales where most of the advice process has been given away for free – to one of ongoing service based on client agreed charging – has meant that efficient and effective client servicing elements must now be the focus of any business model if it is to be successful under RDR.

Three core elements

There are three core elements that need to be addressed if adviser businesses are going
to survive and develop going forward. These are:
1. A clear line from where the business is now to where it wants to be.
2. Good, relevant, clean and up-to-date data.
3. A client orientated back-office system.

Let’s take a closer look at the first of these elements. In order to make an effective transition and to develop a business to where it wants to be, the starting point is to understand where the business is today, identifying
any weak spots but also where its strengths and value lies, in particular when engaging with clients.

One of the first tasks to undertake, therefore, is what
we term the Health Check. This makes the business answer a number of questions, using an online tool, the result of which is a comprehensive report that scores each part of the business and so highlights where a business may need to improve or strengthen
its capabilities in order to be effective under RDR.

The value of the Health Check is that it acts as a catalyst to focus the mind on the important issues that need to be addressed and to prioritise the change programme based on the areas of the business that are weakest.

Once a business has clarity of where it is now, then it can look ahead to where it wants to be
and draw a clear line which will tell it what it needs to do to get from one point to the other. It
can establish milestones, clearly defined deliverables that show the progress being made.

A key element for businesses is to know what they should be charging clients. Time4Advice has developed calculators that will tell firms the charges they should levy to achieve the profit they need to make in order to be commercially successful.

Also important once a business has mapped out its path, is to have supporting the collateral – the documentation, the process flows, the brochureware, as well as the communication approach, the script when engaging with clients – that will ensure the firm adopts a consistent approach to achieving its goals.

Clean and accurate data

The transition of the whole of
the adviser market from the transactional to a more intensely service-orientated model puts far more emphasis on the quality of the data a company holds.

There is a host of reasons
why good data is fundamental and should sit at the heart of a business. If a firm does not have reliable data it can’t deliver the service, it can’t communicate easily – data is a business’s value.

Up and down the country, firms tell us that they know their data quality is suspect. Often within their own departments their staff are using software differently which means the quality of the data being recorded is not consistent. Also, because a lot of systems are not optimised to allow easy access to the data, it becomes increasingly difficult to view it, validate
it and to maintain its currency, so over a period of time the data degrades.

Having conducted a
health check and mapped
out a business strategy, it is important to assess the quality of a business’s data. This can be done by extracting and analysing it – looking
for broken links, 
poor quality
in terms of
and so forth – identifying where the issues lie and how the data may be cleaned up.

Once the data is of the
quality needed, then comes the interesting part, which is making it work for the business.

Client service system

The next stage in the process, having defined the service proposition and cleansed the data, is to ensure the service proposition is delivered efficiently.

This is where the technology comes in. Identifying where a firm can benefit from business process automation can deliver not only workflow efficiencies, and cost reductions, but it can also deliver predictability, which is essential in our highly regulated market.

But it’s more than that as well – because the RDR is changing the way that firms engage with consumers, it is also about how firms manage their relationship with their clients.

Under RDR it is going to be more important than ever for
a firm to know exactly who its clients are, their value to the business, the products and policies they may have, when they were last met with, when they had their last review, when they were last communicated with and when they should be contacted again.

The functionality of a good adviser business software package should segment clients in the way that is most appropriate to the individual business and then allow access to those clients at the click of a button.

This is a client relationship management (CRM) system. What it also needs to do is to synchronise seamlessly with the firm’s back office system, so there is no duplication of data and no danger of the data being degraded because everyone viewing, accessing and amending the data is working off the same system and off the latest live record or document.

What is incredibly important is that the software and the systems work in the way that the business works, not the other way around. There is little point in mapping out a business’s proposition, knowing the direction you want to take and drawing that line between now and the future, only to find you can’t do what you want because the software won’t let you. The best way to achieve the level
of functionality and integration necessary is to use a system that encompasses them all within the one piece of software.

These three elements go hand-in-hand with each other and in my view are fundamental for financial advice businesses to be successful in the new RDR world.

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