April 23, 2018
A BETTER BUSINESS MODEL FOR ADVISORS
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fletcherm
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I spend a lot of time researching info and purchasing studies of the Financial Advice Industry especially referring to the US. The US is a fantastic leading indicator of what will happen in Canada. From this info I feel very comfortable with the following opinions concerning the business models of advisors.
Consider the following trends in our Industry:
- CRM2 and a movement to a fee based compensation model
- In fact; a movement to 100% transparency of ALL client costs including those of the manufacturer – mutual funds, proprietary products, etc.
- Downward pressure of fees / commissions and an increase in Dealer’s fees
- Advisors are seeing their grid get cut
Consider the evolving expectations of clients:
- Clients are expecting Holistic financial planning including estate and wealth transfer
i.e. Expect more advice from their advisor
- As clients age they are expecting their family to become more involved with the decision making process
- Business owner clients expect their advisors to be involved with the succession planning process of their business
- Expecting more for less
Advisors? Keep up with changes or risk losing the value of your business:
- Increasing costs – declining revenue streams – more demand on time
- Selling all products to all people no longer a viable or valuable business model
- More technology needed to keep up
- Traditional sales / prospecting methods don’t work
Solution – Become a Relationship Manager:
- Specialize in one product and/or change business model to a Wealth / Relationship Manager
- Work with specialists – Portfolio Managers, Insurance Specialists, Accountants and Lawyers etc (some even have Chartered Business Valuators work with clients for succession planning)
- This business model gives the advisor more time to develop relationships with clients and prospects and achieve all the objectives of CRM2 and the evolving expectations of your clients
- This is the fastest growing and most successful business model in the US
The Benefits of working with an Investment Counsel Portfolio Manager:
- 100% transparency of fees
- Possible direct tax benefits
- ICPM responsible for KYC, risk assessment, paperwork, etc.
- Fiduciary responsibility not just appropriate product recommendations (Big difference and a huge selling feature for clients)
- All investment products available including risk adjusting private equity investments
- ICPM s have both education and experience requirements that advisors do not require PLUS need provincial securities regulator approvals
- Advisor does not have to be licensed with a Dealer
Queenston has worked with financial advice businesses totalling in excess of $75 Million over the last 5 years. Queenston is the premier merger and acquisition specialist in this space. If you need more information on any of these issues:
- Valuations
- Continuation Plans
- Succession Plans before an Exit Strategy
- Acquisition Model
- Dealer to Dealer
- Transition Consulting
- Selling your business
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