The time for discussing whether you should be considering charging fees or not, or whether commission...
The only way that you are going to operate profitably and successfully in the new climate is by providing financial planning service rather than simple advice for your clients.
In five years' time, or maybe even less, potential clients are not going to paying a fee to IFAs - or whatever they will be called by then - just to be sold a product.
They will, however, be happy to pay a fee for value-added advice and service - much in the manner as as they are now from some intermediaries.
To succeed in the new regime, advisers are going to have to consider the following as part of their action plan.
The importance of a business plan
Do you have a clear idea of which direction you want to take your business? Do you have an understanding of your vision?
Do you know which clients are profitable and, more importantly, which ones are not? Do you know your clients, and would you like to?
Are you profitable and how profitable do you want or need to be? What are your strengths and weaknesses? What are the opportunities and threats?
How long do you actually spend thinking about your business and its direction? What strategic and what tactical steps do you need to take to adapt to the change, and where is the help to allow you to apply the necessary change?
Creating a business plan and answering these questions would help to alleviate these pressures and make the time you spend on building your business more efficient.
Providing a Financial Planning Service
Financial Planning is a six-stage process of providing advice and assistance to a client, for the purpose of achieving their financial goals and objectives.
My belief for the future is financial planners will be very experienced and they will be working with other professionals, such as accountants and solicitors, and not only for themselves as many do now.
Of course, the transitional period between your role now and that of a fully qualified fee-based financial planner requires a great deal of thought and planning. There will be a number of questions you will need to ask yourself:
What technology do I need to invest in - and how will it help me achieve my goals and objectives?
How do I work out a proper fee - and how do I go about charging it? What happens if the client doesn't want to pay?
What is a paraplanner - and how can I charge out the rest of my staff? How do I segment my clients - and how do I segment my staff? Do I really have to record ALL my time?
How did other financial planners move from a commission-based world to a fee-based world? What pain did they have to bear on the way though - and was it worth it?
Rather a lot of questions, some of which you will know the answers to and quite a few that you might not. But there are people who can help you reach these goals, so you don't have to make this big move on your own.
The Institute of Financial Planning is dedicated to providing a high level of support and boosting the promotion of fee-based financial planners.
If you would like information on how the IFP could change your business, telephone 0117 945 2470 or click thru on the left to the IFP website.
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