It has become increasingly clear that advisers need to find a new way of working. The old model of generating revenue by selling products looks unsustainable and advisers must be questioning whether there is a new generation of clients waiting to pick up the mantle as their existing client base ages.
This month, Real Adviser profiles the Route Group, which has developed a possible alternative. This group of independent financial advisers recently took the decision to restructure its business to ensure long-term profitability.
Instead of putting an adviser in charge, the group hired an experienced business person from outside financial services (our interviewee Mark Worrell). His only experience came as a user of financial services, so he was well-equipped to see the pitfalls from the client's side. He spotted a gap in the market among high-earning professionals. These people were often not taking financial advice and their approach to finance was haphazard. They were often accountants and lawyers and therefore the concept of buying services from a financial services 'practice' made perfect sense to them.
The group took a structured approach, using a marketing team to build business partnerships with the companies that employed these high-earning professionals. The group would then give presentations to senior management. Clients pay Route Group a monthly fee and can then use the various advice services - mortgages, investments, pensions - whenever needed. People become clients of the Route Group rather than the individual advisers.
This is precisely the sort of innovation the industry needs if it is to encourage a new generation of people to take advice. Although advisers are only partly to blame, the model as it stands is baffling for those who are new to it. In one of our Business Edge columns this month, Jon Hopper at Openwork talks about the problem of recruiting young, talented people to the industry, but there is also a significant problem of recruiting new younger clients.
Surely it is much easier to structure a portfolio to ensure a client achieves their financial goals when they are 30 rather than when they are 50? Yet few 30-year olds think to take advice. The young are savvy consumers and are unlikely to be attracted by old-style advice practices selling out-of-date products. To attract a new breed of client, advisers must create a new breed of practice.
Cherry Reynard, editor
£300bn of liabilities
View from the front row
Transfer from occupational scheme
Appointed by FCA and PSR boards